We’ve been on the Nvidia case for some time now. See some of our past research publications to get caught up.
Semiconductor specialists The Linley Group recently posted some details around the performance of the Nvidia Tegra 2 which we will see in numerous devices this year.
(There’s been plenty of coverage of what’s inside the A4 so I’m not sure why they are playing possum on that one. See other sources on the A4.)
There are so many races in the mobile Internet device space (smartphones, netbooks and now tablets) that it will be a free-for-all. Add to it the fact that even the TV in the living room is going Internet this year and the demand for new processor architectures and capabilities will be mushrooming.
These are interesting times not just for Nvidia but also for Intel, AMD, Qualcomm, and ARM. It’s hard to get excited about Intel here given the risks to their growth and margins unless they can change their stripes and embrace the idea there there is more to life than the CPU.
Our positive views on Nvidia are rooted in the fact that computing is shifting from processing words and numbers into not just video but games, rich content and interfaces that behave with physical properties and the deeper content that 3D provides.
It’s also true that consumers are expecting to be able to do many of these fairly complex things at once; all on a hand-held device with hours and hours of battery life that costs around $500.
Architecturally this suggests we move into a hyper-multi-core kind of processing to be able to parallelize the processing to meet the demands all this software has on the hardware.
Performance per watt remains a major issue in the mobile space and the one area where we think Nvidia still has some strides to make. This is an area where ARM shines and they are making some improvements in their graphics processing ability.
Our conclusion is that investors will want to play this disruption in computing architecture and we find Nvidia to be the most attractive in terms of execution, design wins and software momentum.
If Nvidia could understand and really consolidate their position in software the company and the stock would be a huge winner. However based on all our research we don’t quite see that happening. Our IV on NVDA leads us to expect a share price this year of $19-20 this year.
[Disclosure: The R2 Model Portfolio has a long position in the shares of Nvidia and Qualcomm.]