This is a top chip stock that has reported strong earnings this year. NVIDIA Corp. (NASDAQ: NVDA) is one of the leaders when it comes to supplying graphics processing technology for the 3D graphics market, including desktop graphics processors and gaming consoles.
NVIDIA is also moving into visual computing chips for cars, mobile devices and supercomputers. The company has a technology partnership with electric car maker Tesla Motors. It has been able to use its ability to leverage past investments, with a more controlled spending structure ahead on unified, which enables strong cash flow that is allowing a focus on capital return, which is currently estimated to be $1 billion next year.
Top Wall Street analysts feel the stock is maturing to a platform company from a pure chip company, and many see the stock continuing to benefit from four secular trends: virtual reality, PC gaming, chips in the automobile industry and graphic processing units (GPUs) in the cloud.
Merrill Lynch likes the company’s long-term prospects in its core markets, which is offset to some degree by some legacy declines. Some on Wall Street do note the ongoing litigation with Qualcomm and Samsung as a potential negative, as well as the uncertainty surrounding Intel royalties, but they view the company as transforming and growing.
NVIDIA investors are paid a 0.9% dividend. The new Merrill Lynch price objective is $55, up from $50, and the consensus target is lower at $40.89. The stock closed Monday at $52.02.
This is the company that was formed after the merger of RF Micro Devices and Triquint Semiconductor. Qorvo Inc. (NASDAQ: QRVO) is a leading provider of core technologies and RF solutions for mobile, infrastructure and aerospace/defense applications. Qorvo has more than 7,000 global employees dedicated to delivering solutions for everything that connects the world.
The company has among the industry’s broadest portfolio of products and core technologies. The Merrill Lynch analysts are convinced that the higher RF content in new smartphones should offset quarterly unit volatility. They also think strategic mergers and acquisitions could help diversify the company away from mobile dependence and add longer life business cycle products.
The Merrill Lynch price target was lifted to $70 from $60, and the consensus target is set at $58.32. The stock closed Monday at $57.73, up over 3% on the day.
While higher target are always a positive sign, investors want to make sure they aren’t chasing stocks at these levels. It may make sense to buy partial positions now and see how earnings season goes.