Is The Decline of PC Hurting NVIDIA Corporation (NVDA)?

Is The Decline of PC Hurting NVIDIA Corporation (NVDA)?

NVIDIA Corporation (NASDAQ:NVDA) is a Santa Clara, California based American global technology company that manufactures graphics processing units for computers and video games. It has a significant holding in the manufacture of system-on-a-chip units for the mobile computing market.  On May 6, Nvidia released its first-quarter report that exceeded analysts’ expectations as demand for high-end graphics cards bolstered the company, while shipments for personal computers declined. The company reported earnings for the quarter ahead of schedule due to an email error that inadvertently sent a preliminary draft to a list of 100 people.

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On May 6, the company reported $0.29 earnings per share. During the same quarter last year, NVIDIA Corporation (NASDAQ:NVDA) posted $0.13 earnings per share. The company beat analysts’ consensus estimate of $0.17 by $0.12. Nvidia had profit of $1.10 million for the quarter, compared to the consensus estimate of $1.06 million. The corporation’s quarterly proceeds were up 15.5% on a year-over-year basis. On average, analysts predict that Nvidia will post $0.85 earnings per share for the current fiscal year.

Nvidia is trying to lessen its dependence on customer PC’s by growing the use of its graphics chips into server computers, mobile devices, and automobiles. Chief Executive Officer Jen-Hsun Huang explains, “Companies are increasingly looking at the company’s Grid server product, and NVIDIA Corporation (NASDAQ:NVDA) is predicting that operators of large data centers will boost deployments of graphics chips in their machinery. They’ve taken some time but the margin contribution is good and their growth is starting to accelerate.”

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Shares of NVIDIA Corporation (NASDAQ:NVDA) opened at $17.94 on Friday, May 9. The company has a 1-year high of $19.46 and a 1-year low of $13.11. The stock’s daily moving average is $17.91 and has a 50-day moving average of $18.48. The market cap for Nvidia is $10.09 billion and its P/E ratio is 21.19.

On May 9, JMP Securities analyst Alex Gauna reiterated a ‘Market Outperform’ rating and a $26 price target for NVIDIA Corporation (NASDAQ:NVDA). He noted, “Although the company was more bullish on mobile Tegra and less upbeat on PC market share than [he] expected, [he] continue[s] to believe its Maxwell GPU and Tegra K1 architectures are differentiated solutions that hold more upside potential than downside risk heading into F2H15.”Guana has a +2.3% average return over the S&P 500 and a 56% success rate according to TipRanks.

Separately, on May 9 Wells Fargo analyst David Wong reiterated a ‘Market Perform’ rating and a $15 to $18 valuation range. He explained, “Though [he] continue[s] to question NVIDIA Corporation (NASDAQ:NVDA)’s longer-term secular growth potential, the company is achieving sales that are above [his] estimates.” Wong has a -0.1% average return over the S&P 500 and a 49% success rate.

Also on May 9, Needham & Co analyst Rajvindra Gill also reiterated a HOLD rating, reasoning “there remains some uncertainty around the gross margin trajectory, the potential deceleration in GPU Y/Y growth rates and the question of how NVDA will replace the Intel royalty income it gets when the agreement ends in 2016 (accounts for ~40% of operating income).” Gill has a +1.3% average return over the S&P 500 and a 56% success rate.

NVIDIA Corporation (NASDAQ:NVDA) currently has an analyst consensus of HOLD

Carly Forster writes articles on stock market news. She can be contacted at

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