Our checks indicate orders for chipsets are robust due to inventory replenishment and some share gains in Intel -based (INTC) chipsets. We believe the company's graphics-chip business (74% of fiscal fourth-quarter 2009 sales) should be flattish sequentially in the April quarter.Shares of NVIDIA (NVDA) have topped $12 today, the highest level since September 2008. NVIDA has had a rough ride in the last couple of years, the stock peaked just under $40 in late 2007 and hit a bottom at $5.75 in November 2008.
However, we also believe a higher mix of low-margin chipsets (coupled with high inventories) should limit gross-margin recovery in calendar 2009/calendar 2010, and we are lowering our calendar 2010 estimated gross margin from 40% to 38%. We would also note risk of sustainable revenue exists for Nvidia as Intel plans on ramping new processors in the second half of calendar 2009 for which Intel claims Nvidia does not have rights to sell chipsets.
JP Morgan gets slightly more optimistic about NVIDIA
Posted on Thursday, Apr 09 2009 @ 19:30 CEST by Thomas De Maesschalck