Nvidia Jumps on Results, Forecast (NVDA, ARMH, QCOM, AAPL, TXN, MSFT, INTC, AMD)

Investing

Published: May 11, 2012 9:04 am

Chip maker Nvidia Corp. (NASDAQ: NVDA) handily beat consensus estimates for first quarter revenues and EPS the company reported this morning. Revenue totaled $924.9 million compared with an estimate of $916.2 million and adjusted EPS came in at $0.16 versus an estimate of $0.10.

The company’s CEO could barely contain his enthusiasm:

Kepler GPUs [graphics processing units] are accelerating our business. Our newly launched desktop products are winning some of the best reviews we’ve ever had. Notebook GPUs had a record quarter. And Tegra is on a growth track again, driven by great mobile device wins and the upcoming Windows on ARM launch.

Nvidia, which licenses designs from ARM Holdings plc (NASDAQ: ARMH), may be getting back on track following a couple of weak quarters. Like other ARM licensees such as Qualcomm Corp. (NASDAQ: QCOM), Apple Inc. (NASDAQ: AAPL), and Texas Instruments Inc. (NASDAQ: TXN), Nvidia is profiting from the explosive demand for mobile devices like smartphones and tablets.

The company’s growth prospects are further enhanced by a decision from Microsoft Corp. (NASDAQ: MSFT) to release a version of is Windows 8 operating system for ARM-based processors, the company’s first foray from the x86-designs of Intel Corp. (NASDAQ: INTC) and Advanced Micro Devices Inc. (NYSE: AMD).

Nvidia forecast second quarter revenue of $990 million to $1.05 billion, significantly above the current consensus estimate of $976.2 million. Non-GAAP gross margins are also expected to rise from 50.1% in the first quarter to 51.5% in the second quarter.

The company’s share price is down about -45% since the beginning of 2011. Nvidia’s forward P/E ratio in February of 2011 was north of 63. That has fallen to 13.65 today, indicating an abundance of enthusiasm from investors that the company simply couldn’t deliver on. The situation is changing now, and Nvidia might actually be set to deliver the goods.

Shares are up 9.5% in the pre-market this morning, at $13.58 in a 52-week range of $11.47-$20.52.

Paul Ausick

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