Can Shield Win the Game for NVIDIA Corporation (NVDA)?

The three main long term growth drivers for NVIDIA are mobile processors, cloud based GPUs and professional GPUs. With the Tegra line of mobile processors and Icera modems, NVIDIA plans to power smartphones and tablets. GRID, a product implementing cloud-based GPU, has started bringing in revenue. Also professional GPUs i.e. the Quadro line of workstation graphics cards and the Tesla line of high-performance computing GPUs have been a large area of revenue for the company and should continue to be the backbone for NVIDIA.

Pioneers in the game market

Nintendo started the trend of casual market with its Wii game console. The console’s motion-sensing controller gave a new dimension to the gaming experience. With its penetrating price policy, Nintendo’s sales increased from $500 million in 2003 to $1.8 billion in 2008. But since then, the sales have fallen every year. The company seems to have lost its hold in the game market. Therefore, investors should avoid Nintendo.

Where launching new devices or versions have not been of much help to either NVIDIA or Nintendo, Sony’s Playstation4 has brought good business for the company. The gadget is expected to be launched in the market soon at an approximate price of $399. Shares of Sony have delivered a 90% return so far in 2013 as anticipation builds for the PlayStation 4. For sure, Sony is a good investment.

A word of caution

If the company focuses on the upcoming Tegra 4i chip and its GRID cloud based graphics card, these can act as a good driving force. These are the main growth drivers and can help the company sail well since Shield is just a sideshow. Nevertheless, investors should be cautious when it comes to putting in your money expecting some good returns. I would rather suggest that investors should wait for the company’s margins in its next quarterly report, before investing in NVIDIA Corporation (NASDAQ:NVDA)’s shares at the moment.

The article Can Shield Win the Game for NVIDIA? originally appeared on Fool.com and is written by Dhara Thakkar.

Dhara Thakkar has no position in any stocks mentioned. The Motley Fool recommends Nintendo and NVIDIA. Dhara is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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