ThinkEquity analyst Krishna Shankar send out a note to investors to discuss NVIDIA's future. The brokerage says NVIDIA will need to articulate a response to near-term discrete graphics card challenges and stresses that the company will have to pursue a x86 license to face the challenge offered by the integration of CPU and GPU in AMD's and Intel's new platforms. Getting a x86 license is no easy job because Intel is unlikely to grand one to NVIDIA, but ThinkEquity believes the recent Intel-FTC settlement provides a good framework for NVIDIA to pursue x86 processor capabilities and sees it as an opportunity for a potential re-entry into the Intel chipset market. Alternatively, Shankar believes NVIDIA should explore strategic relationships or mergers with firms like Broadcom, Marvell, AMD, Qualcomm, etc.
"We believe that NVDA may need to move aggressively and acquire x86 processor capability through licensing or a merger with Via Technologies (Taiwan)," analyst Krishna Shankar said in a note to clients.
Analyst Shankar, who has a "buy" rating on the stock, said, alternatively, NVDA should explore more radical strategic partnering/mergers with larger competitors such as Broadcom, Marvell Technologies, Advanced Micro Devices (AMD), Qualcomm, etc., in order to compete with Intel.
"We believe that pursing the status quo may increasingly not be viable. In our opinion, a strategic acquirer may have to pay a premium of 50-100% to acquire NVDA," Shankar said.