Last month, I made a point of underscoring how a couple of new ventures for Nvidia Corporation (NASDAQ:NVDA) could end up making NVDA stock a worthy name again. Namely, the use of graphics processors rather computer processors in artificial intelligence applications was promising, and the advent of autonomous vehicles could represent a key growth market for Nvidia’s technology.
There’s a flipside to that cautiously optimistic thesis, however. That is, as big as self-driving cars and AI could be for Nvidia, in the near-term, NVDA stock is going to be driven by its core businesses … GPUs for desktops, graphics processing technologies for laptops, and processors for mobile devices. If it falters any on those fronts, last year’s heroic advance could be little more than a setup for a whole lot of profit-taking this year.
To that end, not one but two different analysts have raised a red flag regarding Nvidia’s core business within the past week and a half. Current and future NVDA stock owners would be wise to hear the same point both were making.
Nvidia’s GPU Market Just Hit a Wall
For those not familiar with the term, GPU is short for graphics processing unit — the mini-computer attached to a computer’s motherboard that’s solely dedicated to handling your computer’s display. On most laptops the GPU isn’t a separate piece of hardware, but still requires graphics-management technology.
Nvidia makes some of the best graphics tech in the world.
Yes, the lull in PC sales and laptop sales took a toll on Nvidia’s GPU business. In that it also makes other computer and mobile device components, though, it was able to sidestep the brunt of that weakness. Some say Nvidia is still makes better technology than Intel Corporation (NASDAQ:INTC) and Advanced Micro Devices, Inc. (NASDAQ:AMD) when it comes to netbooks and mobile devices. In that light, the budding rebound in PC sales bodes very well for NVDA stock.
Or, maybe it doesn’t.