NVIDIA Corp. (NVDA) is a leading designer of 3D-capable video chips for computers and other devices. These chips make video games run more smoothly, and appear more lifelike. In its third quarter, which ended October 31, 2010, Nvidia earned $84.9 million. That’s up 9.6% from $77.4 million a year earlier. Earnings per share rose 15.4%, to $0.15 from $0.13, on fewer shares outstanding. Nvidia spent 24.2% of its sales on research in the latest quarter, so it’s more profitable than it seems. … The stock has doubled in the past three months. …

“That’s largely because the company has teamed up with U.K.-based chip designer ARM Holdings (ARMH) to make processing chips for computers and other devices based on ARM’s technology. This agreement will help Nvidia compete with larger chipmakers that are developing chips that no longer need separate graphics chips. Even with this gain, the stock still trades at a reasonable 24.0 times the $1.00 a share that Nvidia will likely earn in the fiscal year ending January 31, 2012. Nvidia is a buy.”

Patrick McKeough, Wall Street Stock Forecaster, 1/28/11


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