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NVIDIA Corporation (NVDA), Advanced Micro Devices, Inc. (AMD): Is This Technology Company on the Path to Recovery?

NVIDIA Corporation (NASDAQ:NVDA) had a tough time last year, and the stock tumbled more than 15%. However, the stock has performed better so far this year. It bucked the industry trend, and posted annual revenue growth for fiscal 2013. NVIDIA’s revenue for the year touched $4.3 billion, and it also managed to increase its market share in key business segments.

NVIDIA Corporation (NVDA)

NVIDIA to lure gamers

While the semiconductor segment is struggling, NVIDIA is rather well placed to weather the storm. A major portion of revenue comes from mobile chips, and now the company is revamping its business structure as well. With its GeForce line, NVIDIA is looking to capture the gaming market. The top two gaming consoles, namely the PlayStation and the Xbox, rely upon Advanced Micro Devices, Inc. (NYSE:AMD) for their GPU requirements.

AMD’s deal with Sony for PS4 was seen as a major win for the company, as such console deals provide GPU companies with visibility. However, AMD is not expected to make substantial financial gains, as such deals work on razor thin margins.

Instead of competing directly with Advanced Micro Devices, Inc. (NYSE:AMD) by trying to poach the console makers, NVIDIA Corporation (NASDAQ:NVDA) is looking to tackle the market in a new way with its Project Shield. As demonstrated during the latest edition of Consumer Electronics Show, the company plans to launch its gaming console, directly competing with handheld devices such as the PSP.

The console will come equipped with the Tegra chip, which ironically was the reason for NVIDIA’s withdrawal from supplying GPUs to Sony Corporation (ADR) (NYSE:SNE) and Microsoft Corporation (NASDAQ:MSFT). The company was willing to augment its mobile chip business and focused on developing the Tegra line. Now, it is using the product of its strategy to capture the gaming segment in a different way. The device is set to be launched in the second quarter.

At this point, it is difficult to quantify the impact of the launch on the company’s top line as NVIDIA Corporation (NASDAQ:NVDA) did not disclose pricing. However, in any case, the new development will help in vertical integration and open new avenues to grow. NVIDIA’s GTX Titan also sold out, again a good omen for the company.

Good start to the year with Tegra 4 family

The stock has finally snapped out of its loss making streak and is in positive territory for this year so far. In Q1, the results are expected to be flat, owing to the cyclical nature of the business. However, NVIDIA improved its margins in the previous year, which is a good sign for a company engaged in otherwise struggling segment.

Its new Tegra 4 processor is also winning rave reviews, and is expected to perform well when it hits the market in the second quarter of the year. NVIDIA has a firm grip on the tablet market, which is expected to show CAGR of 18% through 2016, according to a report released by IDC. With Tegra 4i Mobile chip, the company is also expanding its reach in the LTE market, where it has been lagging so far.

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