Is NVIDIA Corporation (NVDA) Worth Buying?

NVIDIA Corporation (NASDAQ:NVDA) has to know that it’s making a big mistake, but with NVIDIA Corporation (NASDAQ:NVDA) stock approaching its summertime highs, maybe it’s letting swagger get in the way of good judgment.

NVIDIA Corporation (NASDAQ:NVDA) is now taking pre-orders for its handheld gaming device for June delivery. NVIDIA Corporation (NASDAQ:NVDA) Shield — a high-end Android gaming system — is hitting the market at a lousy time.

NPD Group just reported on Thursday that video game hardware sales plunged 42% in April. The weakness stems primarily from the larger consoles as diehard gamers wait for new platforms to roll out later this year, but handhelds are also getting smoked as consumers rely on smartphones, tablets, and iPod Touch devices for their casual gaming needs.

This week’s release of the quarterly App Annie & IDC Portable Gaming Report shows that gaming-optimized handhelds — primarily Nintendo Co Ltd ADR (OTCBB:NTDOY)‘s 3DS and Sony Corporation (ADR) (NYSE:SNE)‘s PS Vita — fell sharply during the first three months of the year. Sure, there’s a seasonal slide to factor in here, but holiday quarter activity was also pretty lousy. More importantly, the popularity of iOS and Google Inc (NASDAQ:GOOG) Play activity is on the rise.

NVIDIA Corporation (NASDAQ:NVDA) bulls will argue that this favors the chances of Shield’s success. It feasts on Google Inc (NASDAQ:GOOG)’s Android operating system and relies on Google Play for digitally downloaded diversions. However, the analog controller gives it more of a traditional console gaming feel. That’s going to make the gaming experience a lot more enjoyable, but it also speaks to the device’s shortcomings before we get to the sticker shock deal breaker. The reason why iOS and Google Inc (NASDAQ:GOOG) Play are so popular is that they’re easily accessible on the smartphones, tablets, and portable media players that folks already own. They don’t want to carry around a dedicated gaming device, and that’s why the 3DS and PS Vita are fading fast.

Then we get to the $349 price tag. It’s a safe bet that most of the Android-based gaming is taking place on far cheaper gadgets. Shield’s specs are impressive. The five-inch HD display and powerful NVIDIA Tegra 4 processor will turn heads. However, at the end of the day, NVIDIA Shield is an overpriced throwback gaming device with high-end features. There is a market for that, but not much of a market.

NVIDIA Corporation (NASDAQ:NVDA) stock doesn’t need a hit, but at a time when analysts see revenue and earnings inching lower this fiscal year, it certainly wouldn’t mind one.

Unfortunately, the NVIDIA Shield is no hit.

The article NVIDIA Stock Needs a Game Changer originally appeared on Fool.com and is written by Rick Munarriz.

Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Google, Nintendo, and NVIDIA. The Motley Fool owns shares of Google.

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