There’s Still No Reason To Doubt NVIDIA Corporation (NVDA)

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Graphics chip specialist NVIDIA Corporation (NASDAQ:NVDA) displayed robust performance in its fiscal fourth-quarter earnings, where profits exceeded Street expectations. But the company’s future is still bothering some of the analysts who track it.

NVIDIA gave a lower-than-estimated revenue forecast for the current quarter. The chief culprit, according to the company, continues to be the worldwide fall in PC sales, as people increasingly shift to smartphones and tablets. As expected, the Street was quick to react; NVIDIA stock prices took a hit.

NVIDIA Corporation (NASDAQ:NVDA)At the same time, I feel it would be wrong to equate NVIDIA’s caution with weakness. On the bright side, it’s always good to have a stance where you promise less and deliver more, isn’t it?

NIVDIA’s primarily known for its graphics chips, targeted at gaming enthusiasts as well as designers. And while it’s true that this segment of its consumers is no longer dependant on their personal computers, the company’s chips are equally acceptable in the realm of phones, tablets, and independent gaming devices. The fact that Google Inc (NASDAQ:GOOG)’s Nexus 7 and Microsoft Corporation (NASDAQ:MSFT)’s Surface tablets use NIVIDIA chips is proof enough of its ability to effect a quick transition from the PC side.  This is also where its reputation as a graphics chip specialist would be hard to beat, especially by bigger rivals such as QUALCOMM, Inc. (NASDAQ:QCOM).

It’s true that Qualcomm’s chips are synonymous with two things – integration and support for the next-generation Long-Term Evolution (LTE) wireless network standard. Qualcomm has already mastered the ability to integrate the processor (the brain of a smartphone) with the modem and its current 860 Snapdragon line of processors combine LTE connectivity which is the major reason why the company has had a near-monopoly in LTE-capable chip sales, with a whopping 86% market share in 2012.

However, I feel that can be taken care of by NVIDIA’s twin weapons – the Tegra 4 and the ‘Icera’ factor. The company’s Tegra 4 line of chipsets combines the company’s famous graphics processor abilities with that of a modem.

And then there’s the 2011 acquisition of wireless startup Icera by NVIDIA in 2011. Icera’s baseband chips can actually be tuned into a number of frequencies, and NVIDIA’s latest Tegra avatar, the Tegra 4i, successfully combines the Icera chip with the Tegra application processor. Now that’s a real challenge to Qualcomm, since it effectively means that the Tegra 4i chips can support LTE as well as other frequencies such as HSPA, with the latter used by carriers such as AT&T and T-mobile.

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