Where Is NVIDIA Corporation (NVDA) Heading?

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NVIDIA Corporation (NASDAQ:NVDA) has been a leader in graphics for many years, adding graphics and performance to some of the best PCs. However, as the PC market is declining — or growing, if you include tablets — NVIDIA has shifted focus towards tablets, smartphones, and handheld gaming.

Jen-Hsun Huang, NVIDIA’s CEO, recently stated that NVIDIA believes it can easily switch to the tablets or “cheap PCs,” and that Windows RT is the future of classic Windows PCs and notebooks. CES 2013 saw some brilliant upcoming gadgets, but one of the headlines was NVIDIA’s Tegra 4 chip and its newest handheld gaming device, Project Shield.


NVIDIA posted record revenue of around $1.2 billion, which showed a growth of 7.3% compared to last year. NVIDIA’s latest earnings report is due mid-February, with doubts arising over NVIDIA’s future and its plan going forward with the Tegra 4 chip and the Project Shield.

Current Position And Tegra 3

The Tegra 3 chip has gained a lot of popularity, especially because it was featured in two of the most-awaited tablets of 2012, the Microsoft Surface and Google Inc (NASDAQ:GOOG)’s Nexus 7. With the Nexus 7 doing very well at the moment, NVIDIA’s upcoming earnings report should show growth from Tegra 3 sales, which currently contribute 30% of NVIDIA’s total revenue. While Tegra 3 remains a really good processor chip for the latest mobile phones and tablets, the real question is whether the Tegra 4 will get as much recognition.

Future in Tablets and Smartphones

The Tegra 3 processor has been excellent so far in terms of performance and graphics. Google Inc (NASDAQ:GOOG) sold over 3 million Nexus 7 tablets, which featured Tegra 3 chips, by the end of last year, with Nexus 7 being one of the best tablets in the market, in terms of what you get for the price tag.

QUALCOMM, Inc. (NASDAQ:QCOM) is possibly one of the biggest competitors for NVIDIA at the moment, even though Sony and Nintendo have their own handheld consoles. NVIDIA’s biggest growth opportunity lies in the tablets and smartphones market, but it looks like NVIDIA is slowly losing out to Qualcomm.

Rumors are already circulating that Google will partner with Qualcomm, rather than NVIDIA in developing a successor tablet of the Nexus 7, which is expected to release sometime this year. If this goes through, NVIDIA will receive a major blow in the industry.

While NVIDIA’s chips are known as the best in terms of graphics, there are certain points where Qualcomm is seen as a better option. While NVIDIA solely focuses on performance and graphics, Qualcomm-based devices feature a balance of performance, battery consumption, and connectivity. It is obvious that users don’t want top-notch graphics for gaming if it comes at the expense of battery life and connectivity. This is where Qualcomm fits in.

Even though Qualcomm might just get the edge over NVIDIA in the upcoming tablets and smartphones, the Tegra 4 is a brilliant processor with up to 6 times more power than the Tegra 3. Best of all, it is compatible with 4G LTE, which the previous Tegra lacked.

Growth In Other Areas

If NVIDIA does miss out some ground in the Android tablets/smartphones market, Chromebooks might be another opportunity for growth. Reports suggest that NVIDIA is planning to get into the growing Chromebooks market with its Tegra 4 processor, with HP seen as a possible partner. Aside from that, NVIDIA’s entry into the market for navigation systems for cars signals that the company is heading for growth in the business sector as well.

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