Is NVIDIA a Bargain Here?

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With shares of NVIDIA Corporation (NASDAQ:NVDA) trading at around $12.34, is NVDA an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

rumor

Pacific Crest has cut its target estimates for NVIDIA based on the potential loss of Google’s (NASDAQ:GOOG) Nexus 7. Michael McConnell of Pacific Crest stated, “We believe NVIDIA has lost the application processor socket to QUALCOMM’s (NASDAQ:QCOM) Snapdragon APQ8064 chipset (S4 Pro) in the next-generation Google Nexus 7 tablet, which is scheduled to begin shipment in 2Q13. Supply chain conversations indicate two reasons for Google’s selection of the Snapdragon APQ8064 over Tegra 4: (1) competitive pricing and (2) a decision to single-source the application processor and 3G/4G modem to simplify logistics and create a fully pin-compatible platform interface.”

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There has been much debate about whether or not this rumor is true. Is it a case of “Where there is smoke there is fire,” or a case of “Don’t believe everything you hear”? If the rumor is true, then QUALCOMM has simply outplayed NVIDIA. QUALCOMM has certainly held the upper-hand as of late.

It’s not all bad news for NVIDIA, though. Let’s take a lot at some more important numbers prior to forming an opinion on this stock…

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