In the technology business, it’s always a challenge staying ahead of the competition. Products and competitors change so quickly that if you’re not ahead of the game, you’re playing catch-up. That’s why I look at the market position of NVIDIA as a case of David versus Goliath as it tries to move from a graphics-chip maker to a mobile-chip powerhouse.

The decline of PCs
Microsoft and Intel aren’t the only two companies hurt by the decline of the PC. NVIDIA has been hit doubly hard because it provided graphics chips for many PCs, and it’s also losing sales to integrated chips such as Intel’s Ivy Bridge and AMD‘s Liano processors.

The hardcore gaming market isn’t holding NVIDIA together, either. Gaming companies are grappling with the move gamers are making from consoles to smartphones and tablets, which doesn’t bode well for NVIDIA‘s demand in either consoles or high powered PCs. These businesses aren’t going to die, but they’ll slowly decline just as the overall PC market is doing.

Mobile here to save the day
If NVIDIA is going to emerge from its funk, it will be on the back of mobile chips, particularly in the Tegra family. Microsoft Surface RT and Google’s Nexus 7 both use the Tegra 3, and the company has high hopes for Tegra 4 and Tegra 4i, which integrates 4G LTE with the mobile processor.

The challenge in mobile is that Qualcomm is the dominant player the market and appears to still have a lead when it comes to power consumption. Analysts think Tegra 4 will beat Qualcomm’s Snapdragon 800 series on a speed basis, but it’s still behind in power consumption, a huge selling point for mobile manufacturers that could stunt NVIDIA‘s growth.

All of this also looks past Intel, which has set its sights on mobile and has the resources to become a major player in the future. Can NVIDIA really fight off Qualcomm’s established presence and Intel’s shadow in mobile? That’s the risk bullish investors are taking.

Too many questions
For now, my money is with the power on Intel and the better value investors are getting for the stock. NVIDIA may very well will significant share in mobile and more than offset losses in its traditional PC market. But I’m not ready to take that risk, because I haven’t seen traction on the income statement, which is what will tell me when NVIDIA has really fought off Goliath.

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Source: FULL ARTICLE at DailyFinance