Shares of NVIDIA Corp. (NVDA - Analyst Report) hit a new 52-week high of $15.90 on Sep 12, eventually closing at $15.70. The closing share price represents a modest one-year return of 14.8% and year-to-date return of 23.4%.
NVIDIA has been witnessing demand across its gaming graphics processing units (GPU) driven by robust performance in desktop, workstation and server market segments. Moreover, the company’s new gaming and entertainment device “SHIELD” has received positive response.
Being an open platform, the device can access anything available to Google’s (GOOG - Analyst Report) Android-based tablets. The device can be used as a web-browser as well as to update Facebook (FB - Analyst Report) .
NVIDIA in its last reported quarter witnessed sequential revenue growth driven by growth across its GeForce, Quatro and Tesla products. However, the company reported lower shipments of Tegra 3 processors, which in turn resulted in year-over-year decline in revenues. NVIDIA has ramped up production of its next generation processor Tegra 4.
Though gross margins of the company expanded due to favorable product mix, higher operating expenses dampened the company’s bottom line on a year-over-year basis.
Nonetheless, the company expects its revenues to increase 7% sequentially, boosted by growth in its GPU business and Tegra Processors.
NVIDIA’s innovative product pipeline that consists of the recently introduced SHIELD and the upcoming Mobile processor – Logan Tegra 4 – will boost top-line growth, going forward.
However, the company is facing stiff competition from the likes of Intel Corp. (INTC - Analyst Report) and QUALCOMM Inc. Also, higher operating expenses are expected to hurt profitability in the near term.
Currently, NVIDIA carries a Zacks Rank #3 (Hold).