New chips should spur Nvidia’s growth

Article Excerpt

NVIDIA CORP. $12 (Nasdaq symbol NVDA; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 572.2 million; Market cap: $6.9 billion; Price-to-sales ratio: 1.8; No dividends paid; WSSF Rating: Average) earned $137.6 million, or $0.23 a share, in its first quarter, which ended May 2, 2010. A year earlier, it lost $201.4 million, or $0.37 a share. However, the year-earlier loss included a $140.2-million charge related to its buyback of worthless stock options from its employees. Revenue jumped 50.8%, to $1.0 billion from $664.2 million. The chipmaker spent 21.8% of its revenue on research in the latest quarter. Inventories rose by 17% in the past three months, which suggests chip demand is slowing. However, Nvidia’s new focus on chips for mobile devices makes it less reliant on cyclical computer sales. Nvidia is a buy. buy…