I’ve had my eye on NVIDIA for a while now. As an old-school fan of PC games, I’ve used several NVIDIA graphics cards over the years, and as a follower of the fast-changing mobile landscape, I can appreciate the chipmaker’s efforts to diversify into the biggest new personal computing market since the market was created in the 1980s. However, I haven’t quite been able to step over the line and actually buy NVIDIA for my personal portfolio, as I’ve watched its stock lose an unexpectedly large amount of ground against the indexes for the last two years despite a stream of (generally) positive news:

NVDA Total Return Price data by YCharts.

What’s wrong with NVIDIA today? Are its problems too great to justify investing in it, or is the company poised for a mobile turnaround on the strength of its latest Tegra processors? Let’s dig into some pro and con arguments to figure out whether NVIDIA should be part of my (or your) portfolio, or if it’s better watched from afar.

Pro: Tegra 4i looks to get a leg up on the competition
NVIDIA‘s latest smartphone chip, the Tegra 4i, is shaping up to be a watershed release for the company’s mobile efforts. It’s the first NVIDIA chip with an integrated wireless 3G/4G LTE modem, and just as importantly, it’s purportedly half the size of smartphone processor market leader Qualcomm‘s competing Snapdragon 800. Small is beautiful when it comes to smartphone components, both in terms of the space premium for a device’s internal layout and in terms of its power consumption. NVIDIA CEO Jen-Hsun Huang pointed out that “we’ll have some phone success this year, but we’re not expecting to have a whole lot of phone design wins until we engage the market with LTE.” Well, NVIDIA‘s engaged the market now.

Con: NVIDIA is still far behind in mobile processors
The Tegra 4i is a big leap forward for NVIDIA, but it may not be enough to upend Qualcomm from its dominant position in smartphone processors. The Tegra 4i may be smaller than Qualcomm’s latest, but the new Snapdragons purportedly retain a power-consumption advantage. Qualcomm executives continue to boast of superior performance, which could be bluster, but may well not be — the market leader’s R&D spending over the past four quarters is nearly four times NVIDIA‘s, and Qualcomm has every incentive to laser-focus itself on holding that lead.

In the most recently available quarter, Strategy Analytics showed Qualcomm far in the lead on smartphone applications processors with a 42% market share. Samsung comes in second with 27%, in large part because of a long-standing relationship with Apple . NVIDIA doesn’t even crack the top five, and its smartphone share has been “relatively flat” year over year.

Pro: NVIDIA leads in non-Apple tablets
There is one area where NVIDIA bests Qualcomm: Android tablets. Apple still controls nearly half of the total tablet …read more
Source: FULL ARTICLE at DailyFinance