Wednesday, July 1, 2015

Seeking Alpha: Nvidia Looking To Leverage Serial Transformation

Not evolving with the times is basically suicide for a semiconductor company, but Nvidia (NASDAQ:NVDA) has gone a little further than most with its transformations over the years. Once seen as a graphics chip company, management has long since leveraged the company's IP into markets outside of traditional graphics processing/gaming and is now looking at markets like automobiles and datacenters as meaningful future growth drivers. Not only that, the company's IP position gives it at least a fighting chance of morphing further into a hybrid chip/software/technology company.

How to value it is the key question. I'm accustomed to seeing significant gaps between FCF-driven and OM-EV/Rev-driven approaches, but the gap here is pretty large. What's more, there are definite uncertainties as to the future of the high-margin revenue Nvidia derives from its IP business. I don't see a lot of downside risk unless the gaming market suddenly tumbles, but investors are likely going to need to exercise some patience to see a delivery on the potential here.

Read more here:
Nvidia Looking To Leverage Serial Transformation

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