It will take Nvidia until 3Q 2012 before We See a Move
John is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Nvidia (NASDAQ: NVDA) was delightedly bullish having beat analysis earnings estimates this last quarter. With things looking brighter, they expect second quarter earnings to come in somewhere between $990 million to $1.05 billion, which is much higher than the analyst consensus of $976 million. But will they do that well that early in the year?
Analysts are rating the company ‘hold.’ Caris & Co. boosts NVIDIA from Below Average to Average. Its reasoning—the rise of tablets bodes well for its processors. But Jefferies lowers its price target from $16 to $15 on Hold-rate NVIDIA on constraint concerns related 28nm capacity which may cap its upside.
It is the 28nm shortage that may cap the company’s ability this next quarter. Qualcomm (NASDAQ: QCOM) is said to be frustrated with its tight supply of its chips, and stated Aprill 18th that it was turning to other foundry suppliers amid the shortage of 28-nm capacity at its longtime foundry with TSMC.
28nm Shortage?
Qualcomm Inc. acknowledged on April 18 that it was turning to other foundry suppliers amid a shortage of 28-nm capacity at its longtime foundr
Taiwanese IT publication Digitimes said the tight supply of chips made at Taiwan Semiconductor Manufacturing Company utilizing 28nm technology is a result of both relatively low yields (which are gradually improving) and TSMC's reluctance to quickly boost manufacturing capacities "in order to maintain gross margins. A number of companies that use this chip are seeing shortages. Advanced Microsoft Devices (NYSE: AMD) has announced a number of 28nm graphics processing units; so far its short. Nvidia has also managed to introduce a number of 28nm GPUs, but blamed TSMC for undersupplies. The shortages are projected to ease only by the end of Q3 2012.
The end of the 3Q sounds more like the time when the company may be able to create more revenue. Not only for this reason but also because this is about the time Windows 8 will be coming out too. Windows 8 will support different types of ARM-based chips, which Nvidia makes. Analysts clearly were not expecting much from Nvidia this quarter as their expectations were well below last year’s results. But as things pick up toward the latter half of the year we might see Nvidia’s stock also rise on increasing revenue.
The Motley Fool has no positions in the stocks mentioned above. johnmylant has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
