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NVIDIA Corporation (NVDA)

This chip stock is gaining lots of attention from Wall Street. Since May, the shares have been upgraded to ‘Buy’ at Nomura, Topeka Capital Markets, and ROTH Capital. And coverage of the company was initiated earlier this month by Goldman.

NVIDIA Corporation (NVDA)
From Cabot Growth Investor

My top pick for the year was NVIDIA Corporation(NVDA), and I’m happy to say things are playing out exactly as expected. Chip stocks are notoriously difficult to invest in, but there is usually one that—because of some unique products and end markets—enjoys a sustained advance. This year, that one is Nvidia.

The gaming industry continues to drive results, as there’s a multi-year upgrade cycle taking place, with more powerful systems demanding Nvidia’s graphics chips. In the first quarter, gaming-related sales made up 53% of the total, and rose a solid 17% year over year.

But there are potentially much larger opportunities going forward. Nvidia’s super-powerful chips are proving to be the standard in emerging industries like autonomous driving (it’s already in testing with some automakers), more powerful auto infotainment systems (auto revenues rose 47% in the first quarter), virtual reality (revenues starting late this year or early in 2017) and datacenter-related chips (revenues up 63% in the first quarter).

Essentially, then, Nvidia increasingly looks like a key supplier to what should prove to be some of the fastest-growing technology niches in the years ahead. One analyst thinks the firm has ultimate earnings power of $3.50 per share down the road, up from about $1.50 this year! Throw in a modest dividend (1.0% annually) and some share buybacks (it already did an accelerated $500 million share buyback earlier this year), and I think NVDA can continue to do very well in the months ahead.

Michael Cintolo, Cabot Growth Investor,, 978-745- 5532, June 30, 2016