Robert DeFrancesco’s

TechStockProspector.com
January 5, 2011

NVIDIA (NVDA)—Tegra Emerges as Android Winner

Barclays Capital upgrades chipmaker NVIDIA (NVDA, $16.75) to ‘Overweight’ with a
price target of $20, saying the company’s Tegra mobile processor is gaining good
traction within the Android ecosystem. The firm estimates that Tegra could add
more than $400 million in higher margin sales in 2011. The fiscal 2012 (January)
consensus revenue estimate is $3.65 billion.

NVIDIA has emerged as one of the best ways to play the demand boom for Android-
based smartphones and tablets. Tech-Stock Prospector subscribers were first alerted
to NVIDIA’s growth prospects surrounding Tegra in the July 2009 issue (TSP #103,
page 4) when the stock was trading around $10.50. We pointed out then that Tegra
could eventually account for half of NVIDIA’s total revenue.

NVIDIA is said to have recently won a major Tegra order from Samsung, and the
processor will be inside the new Toshiba tablet set to debut this spring or early
summer. At its big CES event this morning in Las Vegas, AT&T said Motorola
Mobility would launch its 4G tablet later this year, which will feature a 10.1-inch
screen, Android Honeycomb OS and Tegra processor.

In the middle of December, Citi raised its NVIDIA price target to $20, saying the
company’s graphics chips have made it into 200 laptop designs for 2011, up from
125 in 2010. For fiscal 2012 (January), Citi expects EPS of 89 cents, well above the
consensus estimate of 73 cents. The high estimate is 95 cents.

In Q1 2009, Fidelity bought 37.7 million shares of NVIDIA, upping its holdings to
47.4 million shares. As of Q3 2010, the mutual-fund giant owned 82.1 million shares,
having purchased 12.98 million shares in the latest quarter. Fidelity is by far the top
investor in NVIDIA; Primecap Management is #2 with 39.3 million shares.

Rob DeFrancesco is a former senior writer with Louis Rukeyser’s Wall Street.

TechStockProspector.com, launched in 2003, is an investment-research service

focused primarily on the networking, storage, wireless and software sectors.
Annual subscription: $350.

TSP Deal Report is a weekly e-mail newsletter focused on tech M&A. Each issue
covers the latest developments in the tech deal world and includes an updated
list of potential buyout targets. Annual subscription: $1,045.
For more information or to place an order, call 800-392-0998.