NVIDIA Corp (NASDAQ:NVDA) On A Rise, Beating Wall Street’s Estimates

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By Mark Michaels on August 11, 2014 Technology & Software

NVIDIA Corporation (NASDAQ:NVDA), one of the leading semiconductor producers, is widely known for its chips that are used in gaming computers. The products of this corporation compete with that of Qualcomm Inc. (NASDAQ:QCOM), Marvell Technology Group (NASDAQ:MRVL), Intel Corporation (NASDAQ:INTC) and Advanced Micro Devices (NYSE:AMD). NVIDIA Corporation (NASDAQ:NVDA) has around 8 percent of its market capitalization in short position, and the shorts predict the company to lose its sales to the advanced and integrated chips of Intel Corporation (NASDAQ:INTC). The company is also behind its competitors in the mobile chipping business. However, the shorts compressed a little bit when the company posted better than expected numbers for its second quarter.

NVIDIA Corporation (NASDAQ:NVDA) posted its second quarter’s reports on Thursday: the figures surpassed the estimates of Wall Street by 50 percent. The company reported total earnings of 30 cents for each share, surpassing the estimates of 20 cents. As far as the next quarter’s guidance is concerned, NVIDIA Corporation (NASDAQ:NVDA) has given a positive revenue outlook for it. The company expects annual earnings to reach $1.25/share for the fiscal year 2014.

Needham & Company, a financial investment firm, upgraded NVIDIA Corporation (NASDAQ:NVDA) stocks from neutral to buy with a target price of $23. Rejvindra Gill, an analyst at Needham & Company, was of the opinion that the company’s success resulted due to an increase in its automobile business as well as cloud services. This expansion in company’s operations reduced NVIDIA Corporation’s (NASDAQ:NVDA) dependency on the chip market.

Coming to NVIDIA Corporation’s (NASDAQ:NVDA) mobile chips, the integrated Tegra chips have a pipeline of $2 billion in the automotive sector. Many firms have reiterated their ‘buy’ ratings on the stocks of NVIDIA Corporation (NASDAQ:NVDA).

Much of the credit of NVIDIA Corporation’s (NASDAQ:NVDA) success goes to the management of the company as it has successfully diversified the business of company’s graphic chips into the sectors of cloud computing, data centers, and mobile and automotive industries. The revenues from the business of mobile devices and automobiles increased by 200 percent and reached to $159 million for the second quarter of the year.

NVIDIA Corporation (NASDAQ:NVDA) has a total cash equivalents of $4.6 billion- meaning that it has around $8 for each share. The company’s free cash flow for each year is recorded to be at $600 million. NVIDIA Corporation’s (NASDAQ:NVDA) stock is currently at $19, so the company has a potential of buying back quite a number of its shares. NVIDIA Corporation (NASDAQ:NVDA), during last fiscal year, bought around 62 million of its stocks worth a total of $887 million.

Stocks of NVIDIA Corporation (NASDAQ:NVDA) need to go beyond the value of 19.50 in order to have an upward price pattern with strong numbers. Analysts are of the opinion that the stock will get much attention from the investors given the fact that it is a technology stock and Wall Street has recently updated its estimates for NVIDIA Corporation’s (NASDAQ:NVDA) third quarter financial reports. Moreover, the company has expanded its operations in new markets, which will increase its revenues in the upcoming quarters.