) revenues from mobile computing chips like Tegra and GoForce have
started to rise, and we expect this trend to continue at a faster
pace led by growing adoption of smartphones, PDAs, portable media
players, gaming consoles and tablet PCs. Nvidia earns income from
chip sales as well as royalty from chips used in mobile computing
Nvidia competes with Qualcomm (
), Texas Instruments (
), Infineon, and Broadcom (
) in the mobile computing processor market.
While we estimate Nvidia's revenues from mobile computing
devices to reach $531 million by 2016, Trefis members expect a
higher level of $713 million, corresponding to a 4% upside to our
price estimate for NVDA stock.
We currently have a
Trefis price estimate of $13.43 for nVIDIA's
, about 7% below the current market price of $14.38.
Mobile Computing Devices to Drive Graphics Processors
We believe that rising smartphone adoption will lead to more
graphics usage from mobile gaming, mobile video, and mobile
Internet. Apart from smartphones, Nvidia's Tegra chips are present
in Microsoft's Zune portable media player as well as Sony's
PlayStation gaming console. Demand for graphics cards that can
handle higher higher capacity of audio and high-definition video is
growing rapidly, and Nvidia plans to meet this demand by rolling
out new versions of Tegra chips every year.
Another segment where use of Nvidia chips is increasing is
tablet PCs, which includes netbooks as well as e-readers. We expect
to see significant traction in this particular segment.
Diversity in Product Use to Offset Declines
Since Nvidia chips are used in a number of mobile computing
devices as mentioned above, declining sales in one particular
product segment will be compensated by growth in other products. We
expect demand for smartphones and tablet PCs will continue to
increase use of graphics processors. Additionally, revenues in the
form of royalty will also help Nvidia withstand declining sales of
mobile computing devices.
The Trefis community projects that Nvidia's mobile & game
console computing chips revenue will increase from $274 million in
2010 to $713 million by 2016, compared to the baseline Trefis
estimate of an increase from around $175 million to $531 million
during the same period. The member estimates imply an upside of 4%
to the Trefis price estimate for Nvidia's stock.
complete analysis for nVIDIA's stock is here