Nvidia Is Now a Big Value

 | Sep 12, 2011 | 12:24 PM EDT
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You want a quandary? Here's one: Where should Nvidia (NVDA) trade? First, the maker of high-performance, high-speed semiconductors for pretty much everything save Apple (AAPL) is on a major roll. It has won contract after contact and is, without a doubt, shining in an era when gaming has simply been one of the great secular growth stories.

Nvidia's chips are the graphics behind everything from the bold, lifelike characters you see at the introduction to all of the football games to the electronics in cars, to the lifelike players in games like Call of Duty. Intel's (INTC) chips just aren't fast enough. Only Nvidia can get it done. And when Intel tries to be in fast graphical user interface chips, they license them from Nvidia. There's no earnings risk.

The CEO, Jen-Hsun Huang, came out last week at a tech conference and raised numbers and then said that new estimate is conservative, in part because the Chinese business is so, so strong. (People ask for custom-made PCs there, and because gaming is so strong in China, a preponderance of people want Nvidia's chips in their boxes.)

Plus, Nvidia owns some of the greatest patents in an era when patents are all the rage.

So what is the stock doing down here at $14, down 9% for the year, but more important, down 12 points from its high?

I think because expectations got too high without Nvidia being designed into Apple. Now they are too low, which is when you want to buy.

It's time to add Nvidia to the seasonably strong list of stocks worth owning in an environment where NetLogic (NETL) got a huge, premium bid.

Value is here.

It's a big deal.

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