On Jul 9, 2014, Zacks Investment Research upgraded
) to a Zacks Rank #1 (Strong Buy). A strong return of 32.43% over
the past one year and a long-term expected earnings growth rate of
11.10%, higher adoption rate of the company's Tegra processors and
a positive estimate revision trend make NVIDIA an attractive
Why the Upgrade?
NVIDIA has posted an average positive surprise of 38.19% over
the last four quarters. Moreover, positive estimate revisions
increased the Zacks Consensus Estimate for fiscal 2015 from 91
cents to 92 cents over the last 30 days.
Moreover, a similar positive estimate revision of the same
magnitude was witnessed for fiscal 2016. The Zacks Consensus
Estimate for fiscal 2016 increased by a penny to $1.02 over the
last 30 days.
Some of the optimism related to NVIDIA shares can be attributed
to the higher adoption of its Tegra processors. Recently,
) selected NVIDIA's Tegra K1 processor to power its Project Tango
tablet development kit, which will help developers build
applications featuring 3D mapping and sensing capabilities.
Moreover, Xiaomi, a Chinese mobile manufacturer, launched its
tablet powered by Tegra K1 processors. Additionally, NVIDIA's Tegra
4i chips are expected to compete with
). Tegra 4i is the company's 4G LTE mobile processor.
We believe NVIDIA's innovative product pipeline that consists of
the recently introduced SHIELD 2 and mobile processor Tegra K1 will
boost top-line growth. Moreover, strength in gaming and high-end
notebook GPUs is the other catalyst, going forward.
In addition, NVIDIA entered into a strategic alliance with
International Business Machines
) to produce GPU-accelerated editions of the latter's enterprise
software running on its Power technology.
However, the continuous decline in PC sales is a cause of
concern for NVIDIA's GPU segment. Competition from the likes of
Intel and QUALCOMM and higher operating expenses remain the
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