It's been a disappointing last 7 months for Nvidia (NASDAQ:NVDA) investors. Since reaching a high of $26.17 on 2/2/11, it has since pulled back to a low of $11.65 on 8/19/11. Yesterday's announcement by Nvidia CEO Jen-Hsun Huang may provide a much needed catalyst to move this stock higher. Mr. Huang said the company expects growth in both graphics chips and chips for tablets and smartphone and guided revenue higher ($4.7B to $5B, compared with consensus of $4.4B) for the year beginning in January 2012. Nvidia's processors go into 70 percent of the tablets that run Google Inc.'s (NASDAQ:GOOG) Android software, in competition with Apple Inc.'s (NASDAQ:AAPL) iPad. Today the stock gapped higher at the open, rising more than 8%.
There's not that much not to like with this new development. Even with this raised outlook, some analysts came out and said they were not impressed because they are so set on iPad being the only product that people want. I agree that the iPad is a great product but I also think other tablets based on the Android software are great too. I am not suggesting that iPad will lose its dominance but I do think over time, tablets that run Google Inc's Android software will gain share on the iPad. Nvidia is uniquely positioned to ride this wave.
The view on Nvidia has been so negative lately as evident by the 55% pull back from its high. I think this is way over done. It's time to separate the gem from the dirt. Nvidia is heading higher from here.
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Disclosure: I am long NVDA.