Investopedia: NVIDIA In Transition

Give credit to the management at NVIDIA (Nasdaq:NVDA), they have learned from history and understand that graphics processor companies don't last long. Sure, there can be a great ride up for shareholders as the newest "new thing" grabs share, but real franchises in graphics chips are hard to build and harder still to maintain. NVIDIA seems to want to stick around, though, and the company is expanding into a lot of interesting new areas to do so.

A Reasonable Start to the Fiscal Year
A lot of investors have bought into the "new NVIDIA" story and expectations are high. To that end, the company delivered a solid result this quarter. Revenue was down 4% on a year-on-year basis, but up more than 8% sequentially and above the high end of the analyst range. Within the results, GPU sales rose 4% sequentially (and are more than two-thirds of revenue), while professional solutions (heavy-duty graphics chips and Tesla supercomputing products) fell about 1% and consumer solutions (which includes chips for mobile devices) rose 78%.

Margin performance was also pretty solid. Gross margin improved on both a sequential and year-on-year basis, while operating income was likewise up and margins expanded.

Good as that all may be, institutional investors are obsessed with the future, and NVDA's guidance is likely why the stock was indicated lower in pre-market trading Friday morning. Revenue guidance was alright, but the company did pull back a bit on margins. Operationally it's no big deal, but given the valuation on NVDA shares, it's fairly clear that the expectations are high.

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