Following rumors yesterday that Nvidia (NVDA) has won back Apple’s (AAPL) graphics chip laptop business after being shut out in favor of Advanced Micro Devices (AMD), Needham & Co.’s Rajvindra Gill today raised his rating on the stock to Buy from Underperform, and set an $18 price target.
The Company has several catalysts ahead of it in 2012, including the Consumer Electronics Show in January, the primary gadget fest of the year; the debut of Intel’s (INTC) “Ivy Bridge” processors, which may drive sales of Nvidia’s graphics processing units (GPUs) by association; and the introduction of Microsoft’s (MSFT) Windows 8 software for both PCs and for tablets. Oh, he also is enthusiastic about the company’s “Quadro” professional graphics processors, which will get a “refresh” over “the next 1-2 quarters.”
We had been bearish on NVDA since May 2011 based on our expectations that discrete GPU revs would decline due to lower attach rates & Tegra revs would stagnate due to non-Apple tablet overbuilds. While some of our views have proved out, namely Tegra revs have been lackluster this year, attach rates for graphics have not fallen as expected, rather remaining stable.
Nvidia shares today are up 50 cents, or 3.4%, at $15.13.
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