Nvidia Corp (NVDA): Watch for a Bottom

Chipmaker Nvidia Corp. (Nasdaq: NVDA) showed strength today when it reported stronger revenues and income. Earnings per share remained steady at $0.23 per diluted share, same as the previous quarter. Analysts were expecting $0.21 per share. The graphics chip company reported a loss of $201.3 million or $0.37 a share a year ago.

First-quarter revenue came in at $1 billion, up 2 percent from the prior quarter and up 51 percent from the year-ago period. The revenue outlook was revised down to 3 to 5 percent less in the next quarter, but gross margins are expected to improve by one or two percentage points.

“With our new Fermi-class GPUs in full production, NVIDIA’s key profit drivers are fully engaged,” said Jen-Hsun Huang, NVIDIA CEO and president. “We shipped a few hundred thousand Fermi processors into strong consumer demand. Our Quadro business for workstations grew strongly, fueled by pent up demand from enterprise customers and new growth markets like video editing. And we had record revenue from Tesla processors for high-end servers. We anticipate continued strength in these businesses over the coming quarters.”

NVDA dipped lower after the earnings release in after-hours trading.

Comments: Nvidia has improved operating efficiencies and is showing continuing profitability. Since January 2010, the company has been rated a Sell as well as a Strong Buy. The company’s charismatic CEO works in the company’s favor. NVDA is now trading over 10 percent below its 50-day EMA and is selling at 16 times earnings. This could be one to watch for a good entry point.

Disclosure: No positions