Nvidia Set To Gain Share In High-End PC Graphics: Analyst

Graphics chip maker Nvidia (NVDA) appears poised to regain share in the high-end PC graphics market with the GTX 580/570/560 product family based on its new Fermi architecture, an analyst at ThinkEquity wrote in a note to clients.

Analyst Krishna Shankar also said Nvidia is showing good strength in non-PC areas such as Quadro professional graphics. In the consumer segment, he expects double-digit sequential revenue growth for the Tegra 2 family with several design wins to ramp into production at smartphone and Web tablet customers.

We believe that NVDA also continues to execute well with the Tesla high-end computing platform. On the strategic front, NVDA management indicated confidence in the evolution of the smartphone and Web tablet market based on ARM processor architecture, Shankar said.

As a result, Shankar raised its fiscal 2012 earnings estimate for the company to 92 cents a share from 89 cents a share, while Wall Street is expecting the company to earn 74 cents a share, according to analysts polled by Thomson Reuters.

The analyst said his checks suggest good new product momentum in high-end discrete PC graphics, new notebook PC graphics design wins for Intel's SandyBridge processor platform (200 versus 125 for previous generation), MacBook Air win, and Tegra 2 smartphone/Web tablet platforms.

In our opinion, NVDA holds its leading position in professional graphics and has won designs in the smartphone/Web tablet market at Asustek, Acer, Motorola, and HTC, the analyst said.

Going forward, Shankar believes that Nvidia's Tegra platform for smartphones/Web tablets on the Google Android platform and continuing growth in high-end cloud computing and professional graphics with Quadro will likely lead to steady earnings growth.

Shankar, who has a 'buy,' rating on Nvidia, raised his price target on the stock to $18 from $15.

Shares of California-based Nvidia closed Wednesday's regular trading session at $15.11 on Nasdaq.