Is the Street Writing NVIDIA Corporation (NVDA) Off?

However, I’m inclined to think that the stream of bearishness is more about fears from the competition and less about NVIDIA’s ability to execute. Clearly, the company has not been hurt by rising inventories — as Intel and AMD experienced — and hurting gross margins. So, NVIDIA knows what it is up against. And its new mobile strategy based on its Tegra chips, which integrate many of the features of the ARM architecture, seems to be working pretty well. But will it be enough?

What the company reports this afternoon after market close will answer this question, at least in the near term. Analysts are expecting earnings of $0.23 per share on revenue of $1.1 billion. This would represent EPS growth of 9.5% and 15.4% growth in revenue. It’s worth noting here that NVIDIA has increased revenue for two consecutive quarters, including 13% in Q3. For a company that has to be great just to be good, it needs to reach the high end of its guidance range for the stock to rally.

Speaking of which, I think these shares are worth a gamble here for the long term. There’s very little expected when compared to Qualcomm and even Texas Instruments. At current levels, I think the risk-reward trade-off favors NVIDIA, even more than Intel. And it is not unrealistic to expect fair value to reach $15 to $18 over the next 12 to 16 months.

The article Is the Street Writing NVIDIA Off? originally appeared on Fool.com and is written by Richard Saintvilus.

Fool contributor Richard Saintvilus has no position in any stocks mentioned. The Motley Fool recommends Intel and NVIDIA. The Motley Fool owns shares of Intel and Qualcomm.

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