Needham & Company Downgrades NVIDIA (NVDA) to Underperform; Deteriorating Core GPU Business

Needham & Company downgraded NVIDIA (NASDAQ: NVDA) from Hold to Underperform.

Needham analyst says, "We are downgrading NVIDIA to Underperform and see downside for the shares in the $9-11 range. Our downgrade is not based primarily on near term trends, which are soft, but rather on the following long term concerns: 1) secular challenges in core graphics as integrated graphic offerings from Intel’s Sandybridge and AMD’s (NYSE: AMD) (Not/Rated) Llano fully ramp in the mainstream desktop/notebooks; 2) reductions in our Tegra forecast owing to N-T overbuild from Non-Apple tablets, intensifying competition in 2012 from TI and QUALCOMM (Nasdaq: QCOM) (Not/Rated), and shrinking addressable smartphone TAM; 3) decline in core gross margins (ex-Intel) (Nasdaq: INTC) due to pricing pressure in GPUs and Tegra GM trending below 50%; and 4) multiple compression closer to PC semiconductors stocks (Intel 10x; AMD 9x)."

For more ratings news on NVIDIA click here and for the rating history of NVIDIA click here.

Shares of NVIDIA closed at $15.00 yesterday.

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