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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