Oct Ahead, Supply Tempers Guide, 2-EW
Investment Conclusion
Post close, graphics leader NVDA delivered Oct Q
results ahead of guide, as per recent previews, &
abv broad expections for sales & GM given solid
mkt demand w/ some share loss. With +2% QoQ
sales for Jan Q, mgmt cites supply constraints w/
higher opex tempering solid GM. Our ests edge up
& given fierce competition in core GPUs w/ AMD's
DX11 lead & LT chipset pressure (27% rev) & still
limited Tegra (handset) & Telsa (HPC) visibility
maintain 2-EW w/ limited pot'l upside to $14 or 19x
CY10 EPS of $.75 vs. $.66 prior.
Summary
􀂉 Better Oct Q /GM Jumps; NVDA delivered revs of
$903M +16% ahead of our higher end $823M w/
41% GM vs street 37.3% on better mix & lwr cost/
inv, offset by higher opex enabling EPS $0.19.
􀂉 NVIDIA provided rev guide up modest +2% for Jan
Q on ongoing supply constraints w/modest seg
growth. Aim to monitor potential for dlb ordering
given supply constraints. Blv 14 wks to impact
OpEx. NVDA sees GAAP GM in 40 – 42% range
w/ non-GAAP GM flat QoQ at 41%.
􀂉 Ests Up; Core GPU business, Workstation revival
& Tegra/Tesla key for GM mix & sales outlook.
CY10 EPS $0.75. PT $14 or 1.7x EV/CY10 Sales
of $3.86B or 19x CY10 EPS of $.75.

Stock Rating Target Price
New: 2-Equal Weight New: US$ 14.00
Old: 2-Equal Weight Old: US$ 14.00
Sector View: 2-Neutral