3 Reasons to Avoid NVIDIA Stock (For Now) | Business Markets and Stocks News

Shares of NVIDIA (NASDAQ: NVDA) recently dipped from their all-time highs after a CNBC report claimed that AMD‘s (NASDAQ: AMD) partner GlobalFoundries was developing an autonomous driving chip with NVIDIA customer Tesla Motors (NASDAQ: TSLA).

However, GlobalFoundries denied the report, and CNBC corrected its story, stating that CEO Sanjay Jha didn’t “specifically say” that Tesla was its customer. Those conflicting reports caused tremendous volatility in NVIDIA and AMD shares, since NVIDIA is a market leader in driverless chips, while AMD has also expressed interest in expanding into automotive chips.

NVIDIA CEO Jensen Huang. Image source: NVIDIA.

Nonetheless, NVIDIA’s swoon likely caused many investors to wonder if it’s time to take some profits after the stock’s 190% rally over the past 12 months. I don’t think long-term investors should cash out of NVIDIA just yet, but I think new investors should wait for the stock to pull back before starting new positions. In my opinion, three main factors could cause NVIDIA’s stock to drop in the near future.

1. The valuations

Analysts currently expect NVIDIA’s revenue and earnings to respectively rise 30% and 41% this year. Those numbers look great, but they still represent a slowdown from its 38% sales growth and 138% earnings growth last year.

A stock’s price-to-earnings ratio should generally be lower than the industry average P/E to be considered “cheap”. If a company is growing rapidly, the P/E shouldn’t be much higher than its earnings growth rate. NVIDIA looks expensive by both measures.

NVIDIA trades at 51 times trailing earnings, which is more than double the industry average of 24 for semiconductor companies. Its forward P/E of 46 doesn’t look much cheaper. Both ratios are higher than its estimated earnings growth rate for the year.

The bulls will likely argue that NVIDIA deserves to trade at premium multiples based on the growth of its GPU and automotive businesses. However, the S&P 500 is hovering near all-time highs with a historically high P/E of 24, so a market downturn would still likely cause high multiple stocks with big gains — like NVIDIA — to fall very quickly.

2. Challengers on multiple fronts

NVIDIA’s sales of gaming GPUs, data center GPUs, and automotive CPUs were robust in the past because they didn’t face much competition. But looking ahead, NVIDIA faces much tougher competition across all those markets.

A resurgent AMD has taken aim at NVIDIA’s GeForce GPUs with its next-gen Vega GPUs. The first batch of Vega cards, starting with the Radeon RX 64 and 56 desktop GPUs, are aimed at NVIDIA’s current-gen Pascal cards. NVIDIA CEO Jensen Huang dismissed those threats, claiming that the Pascal would remain “unbeatable” for the “foreseeable future.”

Image source: Getty Images.

However, AMD plans to launch a second-generation Vega GPU, dubbed “Vega 2.0”, to counter NVIDIA’s next-gen Volta chips next year. We don’t know exactly how the Vega 2.0 will compare to Volta yet, but with an unexpected upset — like the one AMD’s Ryzen recently pulled off against Intel (NASDAQ: INTC) in the CPU market — NVIDIA’s GPU sales could slow down.

AMD also recently launched data center CPUs and GPUs — which could threaten NVIDIA’s sales of high-end data center GPUs for machine learning purposes. On the automotive front, NVIDIA faces the possibility of AMD entering the market, as well as competition from Intel and Qualcomm (NASDAQ: QCOM).

3. Fading growth catalysts

The continued growth of NVIDIA’s core gaming GPU business relies on gamers repeatedly upgrading their systems. This could become increasingly difficult as the graphical fidelity of current-gen PC games becomes tethered to their console versions and gamers stick with “good enough” GPUs. This cyclical trend is easy to spot if we examine the year-over-year growth of NVIDIA’s GPU sales over the past few quarters.

 

Q2 2017

Q3 2017

Q4 2017

Q1 2018

Q2 2018

YOY growth

18%

63%

66%

49%

52%

Gaming GPU revenues. Source: NVIDIA quarterly reports.

Meanwhile, plunging cryptocurrency prices could cause interest in using GPUs for mining — which some investors considered a potential revenue stream for NVIDIA — to fade.

NVIDIA’s still a great stock, but it’s priced for perfection

I still think NVIDIA is a solid long-term investment. But I think investors who don’t already own the stock should wait for a pullback before buying any shares. The market looks forward instead of backwards, and investors shouldn’t dismiss the headwinds it faces in the data center, automotive, and gaming GPU businesses.

10 stocks we like better than Nvidia

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

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Leo Sun has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Nvidia and Tesla. The Motley Fool owns shares of Qualcomm. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.

SpaceX Swipes Boeing’s Military Space Shuttle Business | Business Markets and Stocks News

The scoreboard this month reads Boeing (NYSE: BA) — 5: SpaceX — 1.* So why is SpaceX grinning, and Boeing is groaning?

On Sept. 7, Boeing’s X-37B military “drone” space shuttle lifted off from Cape Canaveral on its fifth mission for the U.S. Air Force. (What mission would that be, you ask? Top Secret). But for the first time ever, Boeing — which built the X-37B — didn’t have a hand in actually launching the spacecraft it built.

This could be the beginning of a bad trend for Boeing.

Meet the X-37 robotic space shuttle. Boeing built it — and Boeing just lost a chance to launch it. Image source: NASA.

Winning before beginning (to compete)

You see, in all previous launches, X-37B had lifted off aboard Atlas 5 launchers operated by Boeing and its partner in United Launch Systems, Lockheed Martin (NYSE: LMT). For this month’s launch, however, the U.S. Air Force awarded the X-37B launch contract to SpaceX.

Now, that news in and of itself isn’t a total shock. SpaceX and United Launch Alliance have been butting heads for several months now — ever since the Air Force certified SpaceX to launch payloads for it, in fact. In one notable clash, in May 2016, SpaceX bid against the Boeing-Lockheed joint venture for the right to launch a GPS satellite for the Air Force. SpaceX bid $82.7 million, or “40% less” than the best price the Air Force had hoped to extract from ULA — and won the contract. Chances are, if both SpaceX and ULA had entered similar bids to launch X-37B, the result would have been the same.

What was really curious about this contract, though, is that ULA apparently wasn’t offered a chance to compete at all. In a published statement, United Launch Alliance asserted that “ULA did not have the opportunity to bid for the Air Force’s fifth X-37B Orbital Test Vehicle (OTV) mission.” 

Now, when asked by Reuters, the Air Force declined to confirm Boeing’s story that the Air Force awarded the contract to SpaceX without soliciting other bids. But assuming the story is true, that would mean that SpaceX did not really “beat” ULA in winning this contract. Given that ULA and SpaceX are the only two space launch companies certified to launch national security missions, and given that ULA was not allowed to bid, the X-37B contract would have gone to SpaceX by default.

What it means for Boeing (and Lockheed Martin)

The big question is “why?” According to the Air Force, the main reason it has certified both SpaceX and ULA to launch USAF payloads is to ensure the service has “flexible and responsive launch options” to choose from when launching its satellites. (A secondary objective, almost certainly, is to lower its launch costs by forcing SpaceX and ULA to compete on price). But if that’s what the Air Force wants to accomplish, then why would it not invite ULA to bid for the X-37B contract?

Was it because the Air Force already knows that ULA cannot compete with SpaceX on price? Or does the answer perhaps lie in ULA’s creative use of the phrase “did not have the opportunity?” Parsed one way, what ULA might really have been saying was that it didn’t have the opportunity — i.e. ability — to match SpaceX’s prices, and so decided not to bid at all.

Either way, as more than one dozen Air Force space launch contracts, come up for bid between now and 2019, the outlook doesn’t look good for Boeing and Lockheed. Whether the Air Force is rejecting the possibility of ULA being able to compete with SpaceX out of hand, or whether ULA is recusing itself, either way, it looks like a lot of money could slip through ULA’s fingers — and into SpaceX’s pocket instead.

*By the way, following its successful launch of X-37B this month, SpaceX successfully relanded its Falcon 9 launcher back at Cape Canaveral — its 16th such successful landing of a used rocket. So the scorecard for landing reusable rockets now stands at SpaceX — 16: Boeing and Lockheed Martin — 0.

10 stocks we like better than Boeing

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

3 Stocks That Could Put NVIDIA’s Returns to Shame — The Motley Fool

NVIDIA‘s (NASDAQ:NVDA) stock price has nearly tripled over the past year, helped by one stunningly good quarter after another as a broad range of customers have come to realize the power of its flagship graphics chip technology.

This doesn’t mean NVIDIA is done climbing yet. Thanks to the central role its GPUs play enabling the advancement of the fast-growing artificial intelligence market, the company believes its best days have yet to come. 

But that also raises the question: Are there any stocks on the market that could trounce even NVIDIA’s returns?

So we posed that question to three top Motley Fool investors. Read on to learn why they think Ubiquiti Networks (NASDAQ:UBNT), Red Hat (NYSE:RHT), and Fossil Group (NASDAQ:FOSL) fit the bill.

Businesswoman drawing an exponential growth line

IMAGE SOURCE: GETTY IMAGES

A different network specialist

Steve Symington (Ubiquiti Networks): Ubiquiti Networks stock has more than quadrupled over the past five years, which already makes this relatively small ($4 billion market cap) business an NVIDIA-esque market beater. But it’s also still reeling after short-seller Citron Research leveled fraud accusations against the networking hardware specialist last week. Most notably, Citron’s Andrew Left voiced skepticism of Ubiquiti’s unusually high margins for its industry, potentially shady international distributors, its small executive management team, and little cash held in the U.S.

But even a cursory glance at the sensationalist report — which likened Ubiquiti founder and CEO Robert Pera to the heads of Enron and Valeant — had me questioning whether Citron’s claims held water. Sure enough, several analysts quickly came to Ubiquiti’s defense by arguing that Left offered little new information that Citron bulls didn’t already know.

For example, Morningstar analyst Ilya Kundozerov elaborated:

This is what [Andrew left] does. Ubiquiti is easy to poke holes in. […] Ubiquiti has a bare-bones organizational structure, that’s key, so a lot of the red flags are coming from that point. They don’t have enough people, but that doesn’t make them a fraud. […] I would say it’s a fairly unique company and for some people that may sound worrisome. It’s very unusual, so people may try to stay away from unusual business models.

What’s more, while some investors have criticized the company for not formally addressing the report immediately, the following day Ubiquiti responded by increasing its current-quarter revenue guidance, approving an incremental $100 million share repurchase program, and scheduling an investor update next week (on Sept. 26, 2017, several weeks ahead of its expected quarterly call) to be hosted by Pera.

I suspect Pera will offer more specific details at that time to debunk Citron’s allegations. But for investors willing to take advantage of its recent pullback, I think Ubiquiti Networks stock should continue to deliver market-beating returns from here.

That Red Hat looks good on you

Anders Bylund (Red Hat): It’s true that NVIDIA’s stock has gained an eye-popping 840% over the last three years, making it tough to find a match for the company’s recent performance. But we are probably getting close to peak NVIDIA these days, and it’s not hard at all to find companies I would rather own right now.

In particular, I would recommend that you take a look at open-source software specialist Red Hat instead.

For starters, Red Hat’s stock has delivered a market-stomping 84% return over the same three-year period. In 2017 alone, investors have enjoyed a 53% surge that’s right in line with NVIDIA’s returns.

But Red Hat is no flash in the pan. The company has delivered double-digit sales growth in every single quarterly report since the fall of 2002. The resulting financial chart is downright beautiful:

RHT Free Cash Flow (TTM) Chart

RHT Free Cash Flow (TTM) data by YCharts.

Note that Red Hat’s steady sales growth has been accelerating in recent years. This is how you build a cash machine for the long term. The company is busy stealing market share in the enterprise computing sector from established giants like Microsoft and IBM, with a low-cost business model that includes a worldwide community of open-source developers.

Nvidia has soared before, only to come back to earth again a few years later. I prefer Red Hat’s fast-and-steady approach to long-term growth.

A disaster with turnaround potential

Tim Green (Fossil Group): Shares of watch and accessory designer and retailer Fossil are down a whopping 90% over the past three years. Revenue has been tumbling, margins have eroded, and the balance sheet has become more precarious as the company loaded up on debt to buy back shares. Fossil is now valued at $425 million, less than the company spent on share buybacks in 2014 alone.

FOSL Chart

FOSL data by YCharts.

There’s no shortage of reasons to avoid Fossil stock like the plague. But if the company can successfully stop the bleeding, the stock could be in for quite the rebound. Shares of Fossil are cheap, assuming the company isn’t in a death spiral. Free cash flow totaled $134 million over the past twelve months, putting the price-to-free cash flow ratio at a hair above 3. The stock trades for about two-thirds book value and just 0.15 times sales. Any good news at all could send the stock soaring.

Fossil’s turnaround plan involves pushing hard into the smartwatch market. Fossil became the No. 5 player in the global wearables market during the second quarter, moving 1 million devices and claiming 4% of the market. The company’s acquisition of Misfit and its strategy to produce hundreds of different models under a wide variety of brands are producing some results.

Things will likely get worse at Fossil before they get better, and the stock could certainly continue to move lower. But Fossil is priced for catastrophe, and anything better than the direst scenario could turn it into a monster stock.

Will “Grand Theft Auto” Continue to Push Take-Two Interactive Stock Higher? | Business Markets and Stocks News

Like other major video-game publishers, Take-Two Interactive (NASDAQ: TTWO) is benefiting from selling games directly to consumers through digital downloads, but even that tailwind pales in comparison with the company’s biggest performance driver. That’s not to downplay the significance of the digital sales transition, but the publisher’s high-flying stock run in recent years has even more to do with the ongoing success of Grand Theft Auto V.

Take-Two’s shares are up more than 800% over the past five years and trade at a whopping 43 times forward earnings estimates. However, its forward price-to-earnings-growth ratio is just 0.2, so the stock actually looks cheap if the company can continue deliver impressive earnings gains. Much of that will come down to how much gas the Grand Theft Auto series has left in the tank.

Image source: Take-Two Interactive. 

GTA V still has big sales potential

According to the NPD Group’s tracking, Grand Theft Auto V came in as America’s second best-selling game in August, trailing only Madden NFL 18 from rival publisher Electronic Arts. Of course, it’s worth noting that EA’s football game released last month, while the first versions of Grand Theft Auto V landed on store shelves all the way back in September 2013. Across its incredible run, Take-Two’s monster hit has shipped over 80 million copies, made America’s top 10 best-selling-games list in 41 out of its 49 months on the market, and delivered the best overall revenue and unit sales in the history of NPD Group’s industry tracking. The game’s online mode is also a hit that’s generating substantial in-game content sales that are hugely profitable. 

Based on numbers from SteamCharts, which tracks engagement on the PC gaming platform Steam, the average daily concurrent players for GTA V from June to August of this year increased roughly 41% over the prior year period, and it’s probably safe to assume that engagement is up on PlayStation and Xbox platforms as well. With an expanding sales imprint, evidence that the game is still making substantial gains in its active player base, and the company’s regular introduction of new content, there’s a strong chance that GTA V‘s online mode will continue to deliver year-over-year sales increases.

There’s also the possibility that Take-Two will release the game on Nintendo‘s (NASDAQOTH: NTDOY) Switch console — potentially leading to another dramatic sales bump. Nintendo platforms typically attract a younger user base, but with news that M-rated games including Doom and Wolfenstein II: The New Colossus are heading to the system, it’s clear that publishers are interested in testing the market for games intended for older audiences on the platform. Take-Two could likely generate millions of additional GTA V sales if it releases the game on Switch.

All told, I think it’s feasible that total lifetime shipments for Grand Theft Auto V will exceed 100 million units. 

Image source: Take-Two Interactive.

Will the next GTA games be as successful?

Grand Theft Auto V is one of the most profitable games in history, which makes delivering a more successful follow-up a tall order, but the franchise still has growth potential ahead.

The smart move for Take-Two, and one it is likely to pursue for the series’ next installment, is to replicate the release schedule that helped make GTA V such a big hit. That means launching the next GTA sequel on PlayStation 4 and Xbox One when these systems are near the tail end of their life cycles to take advantage of their large user bases — and then delivering an updated version of the game for next-gen platforms and PC at a later date to benefit from new hardware momentum and players who are willing to purchase the game again to experience an updated, graphically superior version.

The franchise actually has considerable room for growth in the digital sales space. Following the incredible success of GTA V‘s online mode, it’s likely that Take-Two will put an even greater emphasis on creating a multiplayer mode that keeps players engaged (and spending) with the series’ next installment. As one of the most powerful brands in gaming, the series also has the potential for a much bigger presence in mobile. Take-Two already sells older series entries for smartphone and tablet devices (Grand Theft Auto: San Andreas retails at $6.99 and is currently the ninth best-selling paid game in the iOS store), but it has yet to release a franchise installment that’s built from the ground up to take advantage of the unique benefits these platforms offer.

Take-Two is building its franchise portfolio

The Grand Theft Auto series appears to be in strong shape. Each mainline entry has outsold its immediate predecessor, and even if the next installment doesn’t manage to match GTA V‘s incredible unit sales, it could still be more profitable thanks to growth for game downloads and in-game content sales. However, Take-Two still needs to continue building its portfolio of other hit franchises, and it seems to be making progress on that front. In addition to its annual sports releases, the company is now aiming to debut at least one new, blockbuster title each year — with a new entry in the Red Dead Redemption series launching in spring 2018 and at least one other high-profile, non-sports title due for release next year fiscal year.

With Grand Theft Auto looking as if it will continue to be a powerhouse franchise, an expanding lineup of other viable properties, and industry tailwinds at its back, I think Take-Two stock still has room for big growth.

10 stocks we like better than Nintendo

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and Nintendo wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

*Stock Advisor returns as of September 5, 2017

Keith Noonan owns shares of Take-Two Interactive Software. The Motley Fool owns shares of and recommends Take-Two Interactive Software. The Motley Fool recommends Electronic Arts. The Motley Fool has a disclosure policy.

Is Baidu Dumping NVIDIA for AMD? | Business Markets and Stocks News

The advent of artificial intelligence (AI) and its mass adoption in the tech world has caused a paradigm shift that many companies are feeling — NVIDIA Corporation (NASDAQ: NVDA) has been one of the greatest beneficiaries of these developments. Researchers quickly learned that the same functionality that graphics processing units (GPUs) offer for rendering images in gaming also makes them ideal for AI applications. The ability to process vast stores of data at lightning speeds made GPUs critical to early AI research.

NVIDIA has consistently dominated the market for high-end processors, making it the obvious choice for training AI systems. Chinese search giant Baidu (NASDAQ: BIDU) has one of the most advanced AI programs in China and has long been a user of NVIDIA GPUs. The companies recently announced a far-reaching AI partnership covering everything from cloud computing to self-driving cars.

That’s why it came as something of a surprise when Baidu also announced a collaboration with NVIDIA rival Advanced Micro Devices (NASDAQ: AMD) “on optimizing software for AMD Radeon Instinct GPUs in Baidu datacenters.” 

The NVIDIA DGX-1, the world’s first deep-learning AI supercomputer in a box. Image source: NVIDIA. 

Is the honeymoon over?

While this is AMD’s first serious foray into the AI space, NVIDIA has been aggressively courting the market for years. As a result, NVIDIA’s data-center revenue has increased 174% year over year, on average, in each of the past five quarters. With a lack of any serious competition, NVIDIA positioned itself in the majority of large data centers running AI applications.  

Its customers are a veritable Who’s Who of companies in the big tech world, and its dominance continues today. NVDIA GPUs provide the foundation for all the top cloud computing services, and it reaped the significant financial rewards that came with its early lead.

Taking the fight to NVIDIA

AMD has been aiming for a piece of the high-end GPU market with the release of its new Radeon Instinct line of GPUs, which are geared directly toward high-performance computing and a wide range of machine learning and deep learning applications. This collaboration with Baidu gives AMD some much-needed credibility and establishes the company as a viable competitor in the burgeoning space of AI against a much more established rival.

As my colleague Harsh Chauhan pointed out, tests performed on Baidu’s open-source DeepBench deep-learning benchmarking tool showed that AMD’s Vega GPUs already compare favorably with NVIDIA’s Telsa P100 offering. It remains to be seen if that will hold up with the release of NVIDIA’s upcoming Tesla Volta V100, which is scheduled to make its debut later this year.

The opportunity is staggering

According to a report by Markets and Markets, the AI chipsets market is expected to grow at a compound annual growth rate of 62.9% over the next five years, to $16 billion by 2022.

All in all, a collaboration between Baidu and AMD doesn’t spell immediate trouble for NVIDIA, and its GPUs will still have a prominent position in Baidu’s data centers. NVIDIA has had the field to itself for some time, while others were playing catch-up. Baidu also has a history of partnering with all the top players. With the improvements to its latest high-end GPU’s designed specifically for AI applications, AMD just got a foot in the door.

This is definitely a win for AMD, giving it an official debut in the nascent field of AI, which could open the door for more companies to adopt AMD processors. This could, in turn, put pressure on NVIDIA’s data-center business, which has been the growth engine behind the company’s recent gains. AMD still has a long way to go, however, before it could unseat the reigning champ.

10 stocks we like better than Nvidia

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

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Danny Vena owns shares of Baidu. The Motley Fool owns shares of and recommends Baidu and Nvidia. The Motley Fool has a disclosure policy.

NVIDIA Corp. Reportedly Prepping GeForce GTX 1070 Ti | Business Markets and Stocks News

In May 2016, graphics chip specialist NVIDIA (NASDAQ: NVDA) began rolling gaming-oriented graphics processors based on its then-new Pascal architecture. The first products out of the chute were the GeForce GTX 1070 and its more powerful sibling, the GeForce GTX 1080, targeted at the high-end of the personal computer gaming market.

These processors were notable because they delivered substantial improvements in performance and power efficiency over their predecessors, thanks to the use of a new manufacturing technology, as well as significant design work on NVIDIA’s part. 

Since then, NVIDIA has released additional gaming products based on its Pascal architecture, including lower-power, lower-cost GPUs like the GeForce GTX 1060 and GeForce GTX 1050, and higher-end offerings like the GeForce GTX 1080 Ti and the brawny Titan Xp for gamers willing to spend big bucks for the best possible performance.

GPUs based on the Pascal architecture have been hugely successful for NVIDIA, helping to power significant growth in both the company’s gaming business and its booming data center accelerator business.

Per rumors from MyDrivers and Baidu, spotted by graphics card-oriented news website VideoCardz, NVIDIA is preparing a new Pascal-based graphics processor for the gaming market, to be called the GeForce GTX 1070 Ti.

Slotting in between the 1070 and 1080

NVIDIA’s MSRP for the GeForce GTX 1070 is $379 (though good luck finding one at this price, thanks to the cryptocurrency mining boom, which has dramatically increased demand for the GTX 1070, as well as other graphics processors). The GeForce GTX 1080’s MSRP sits $120 higher at $499.

Based on NVIDIA’s traditional naming scheme, the GeForce GTX 1070 Ti should be a higher-end product than the GeForce GTX 1070 but would sit lower than the GeForce GTX 1080 on both pricing and performance.

How might NVIDIA price the 1070 Ti?

I see two possible scenarios with respect to the potential MSRP for the GeForce GTX 1070 Ti — assuming, of course, that it’s real and comes to market.

First, it could simply sit smack-dab in the middle of the GeForce GTX 1070 and GeForce GTX 1080 on the pricing table at around $439. The purpose of a GPU at that price would be to try to upsell potential GeForce GTX 1070 buyers who aren’t quite ready to drop the cash required on the GeForce GTX 1080.

That could work, but the added revenue from those upsells could be offset if some potential GeForce GTX 1080 buyers opted to go down a notch to the new GPU, saving some money with a product that’s “close enough” in performance.

Another possibility — and, frankly, it’s one that I think is more sensible — would be that NVIDIA would drop pricing on the GeForce GTX 1070, then slot in the GeForce GTX 1070 Ti at the about the price point that earlier product previously occupied.

Such a move would have the effect of increasing the performance-per-dollar of some of its offerings, potentially stimulating demand during the holiday season (which, not-so-coincidentally, is when several high-profile PC games are set to launch).

10 stocks we like better than Nvidia

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

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*Stock Advisor returns as of September 5, 2017

Ashraf Eassa has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends NVIDIA. The Motley Fool has a disclosure policy.

iRobot Notches a Significant Patent-Dispute Win | Business Markets and Stocks News

Only a day after iRobot (NASDAQ: IRBT) stock plunged, as a short-seller highlighted the threat of new competition for the Roomba maker, the company offered an effective reminder of how hard it is to muscle into its turf. More specifically, on Thursday, iRobot announced it has reached a confidential agreement stemming from a patent dispute with Micro-Star International (MSI), a Taiwan-based computer and component manufacturer.

Per the terms of the agreement, MSI has agreed to pay iRobot an undisclosed amount and to exit the robotic-cleaning industry worldwide. In turn, iRobot has agreed to remove Hoover Quest 600, 700, and 800 products sold by Hoover, Inc. from a pending U.S. International Trade Commission (ITC) investigation and a related court case in Massachusetts.

iRobot isn’t finished yet

Investors should note that MSI is only one of several companies named in iRobot’s patent-enforcement actions, the legal proceedings for which were originally filed in April and spurred the ITC’s official investigation the following month. While iRobot is removing the three aforementioned Hoover robotic vacuums from its complaint — presumably because parts supplied by MSI were the source of their respective patent violations — iRobot is still pursuing action against Hoover for its Quest 1000 product, as well as various products from Bissell, bObsweep, Black & Decker, Taiwan-based Matsutek Enterprises, and two Chinese companies, including Shenzhen ZhiYi Technology and Shenzhen Silver Star Intelligent Technology.

That’s not to say enforcing its fortress-like patent portfolio is always fast work for iRobot. You might recall that Shenzhen Silver Star was the subject of preliminary injunctions obtained by iRobot through a court in Germany in 2013, and even had its infringing products seized from that year’s IFA consumer electronics show in Berlin. Shenzhen Silver Star’s offerings appeared to be virtual carbon copies of iRobot’s most popular Roomba models at the time, but that’s also still the case with many of the industry’s value-priced Roomba knockoffs today.

Protecting what’s theirs

iRobot VP and chief legal officer Glen Weinstein added:

This settlement represents the first successful milestone on the enforcement effort iRobot initiated earlier this year. Since being founded more than 25 years ago, iRobot has made significant investments in R&D and intellectual property to innovate and bring consumer robotic technologies to market worldwide. The agreement by MSI to exit the robotic cleaning industry signifies the value of iRobot’s intellectual property and the company’s efforts to protect it.

I’ve pointed out before that iRobot typically aims to spend around 12% of its annual revenue on research and development — a figure that equates to more than $100 million this year based on the $850 million midpoint of iRobot’s latest 2017 revenue guidance. That’s also a goal that activist investors have tried — and thankfully failed — to curb in the interest of bolstering iRobot’s near-term margins. But while $100 million might sound overwhelming, iRobot rightly views these investments as crucial to maintaining its innovative roots and extending its technological market leadership.

This also isn’t iRobot’s first rodeo in the patent-dispute world. In addition to its previous action against Shenzhen Silver star, its other notable IP defenses include a patent infringement lawsuit against five European companies in 2013 and a trade secrets theft and patent-violation case against defense robot company Robotic FX in 2007.

Looking ahead

As it stands, iRobot has an evidentiary hearing in the ITC investigation scheduled for March, 2018, so investors will likely need to wait until then to receive fresh color on this case. But given the precedent set by iRobot’s agreement with MSI this week, I won’t be the least bit surprised if we see more competitors bowing out of the market in the coming months.

Find out why iRobot is one of the 10 best stocks to buy now

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1 Artificial Intelligence Stock That Turned $3,000 Into More Than $40,000 in 5 Years — Is It Still a Buy? | Business Markets and Stocks News

If you invested $3,000 in graphics-chip specialist NVIDIA (NASDAQ: NVDA) five years ago, you’d now be sitting on top of $40,200 — assuming you reinvested your modest dividends.

This is an incredible haul considering the broader market would have turned your $3,000 into about $5,800.

Let’s look at what’s happened with NVIDIA in recent years to cause investors to drive up the price of its stock, with an eye towards determining if the stock still looks like an attractive buy today.

Image source: Getty Images.

Transformation from just a chipmaker into an AI player

NVIDIA stock’s tremendous price rise in recent years has been well-earned, as the company has been posting massive growth in revenue and earnings. This growth has largely been driven by NVIDIA’s successful transition from a company heavily focused on graphics processing units (GPUs) for gaming and professional visualization applications into a company that’s also a player in the burgeoning artificial intelligence (AI) space.

It turns out that the company’s GPUs are great at training artificial neural networks how to think like humans, a developing category of AI called deep learning. Once this became clear to NVIDIA’s founder, CEO Jensen Huang, he began aggressively focusing the company’s efforts on optimizing its GPUs for AI applications — a fact that demonstrates the company’s nimbleness.

NVIDIA’s traditional gaming market has been performing very well — revenue jumped 52% year over year in the second quarter of fiscal 2018, accounting for just over 53% of total revenue — and its professional visualization market has been performing solidly. However, it’s the company’s AI-driven data-center business that is its most powerful growth engine, with revenue in this market platform soaring 175% year over year last quarter. The data-center segment blew by professional visualization in revenue size over the last year and is now NVIDIA’s second-largest business; it accounted for nearly 19% of total revenue last quarter.

NVIDIA’s smallest target market platform, auto, is at the cusp of benefiting big from AI. In the spring of 2016, the company began shipping its DRIVE PX 2 AI platform, a supercomputer for processing and making sense of the data taken in by semi-autonomous and fully autonomous vehicles. NVIDIA has notched several huge wins in this space. In October, electric-vehicle maker Tesla began using DRIVE PX 2 to power its autopilot on all new vehicles. In 2017, automakers Toyota, Audi, Mercedes-Benz, and Volvo announced plans to use DRIVE PX 2 to power their autonomous driving systems in vehicles planned for market introduction. And Chinese search engine giant Baidu announced this summer that it’s adopting the platform for its driverless vehicles initiative and partnerships.

A pretty picture of the past, but how does NVIDIA stock look now? 

NVIDIA stock is pricey based on Wall Street analysts’ earnings estimates. It’s trading at 42.9 times analysts’ projected forward earnings, and it sports a five-year PEG (P/E to projected earnings growth five years out) of 3.6. (For some context, fellow chipmaker Intel has a five-year PEG of 1.4.) 

However, I don’t place much stock (pardon the pun) in analysts’ forward earnings estimates. As a group, they’ve been significantly underestimating NVIDIA’s earnings for quite some time — by percentages ranging from 19.3% to 45.6% in the last four quarters, for instance. So it seems much more likely than not that this dynamic will continue — and if it does, then the stock will prove to be not as pricey as suggested by the forward valuations. 

Analysts expect NVIDIA’s earnings to jump 40.6% year over year in the current year and then slow to an average annual growth rate of just 12.9% over the next five years. The odds are highly in favor of that 12.9% proving to be too conservative, in my opinion. This is a company that has a leading position in AI-driven data centers and driverless car applications, and it is poised to get a nice boost once virtual reality and augmented reality take off. That’s not to mention NVIDIA’s leading position in supplying graphics cards for gaming, which is booming thanks to esports and other factors, or the recent tailwind it’s been getting from the rising prices and popularity of cryptocurrencies, such as Bitcoin. (GPUs, as it turns out, are great at mining cryptocurrencies.) 

NVIDIA stock could pull back over the short or intermediate term, as it’s due for a breather. The market might do what it often does — overreact — when growth slows next year, as it almost surely will because the year-over-year comparables are going to be mighty tough. However, if NVIDIA’s GPU-based approach to deep learning remains the favored approach (or even one of several favored approaches, as competition surely will heat up) to this subcategory of AI, then investors should be richly rewarded over the long term. AI promises to be gargantuan and touch just about all industries. 

NVIDIA is certainly not a stock to bet your house on, but it has a good risk-reward profile for those who have a longer-term investing outlook and are comfortable with a moderate amount of risk and volatility. 

10 stocks we like better than NVIDIA

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Beth McKenna owns shares of NVIDIA. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Baidu, Facebook, Netflix, NVIDIA, and Tesla. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.

Equifax Breach to Lift Three Stocks

Sept. 12, 2017 3:41 p.m. ET

Piper Jaffray

After the market close Thursday,


Equifax



EFX 2.510608203677511%



Equifax Inc.


U.S.: NYSE


USD115.96


2.84
2.510608203677511%



/Date(1505250035941-0500)/


Volume (Delayed 15m)
:
6896287



AFTER HOURS



USD116.15


0.190000000000012
0.1638496033114867%


Volume (Delayed 15m)
:
41949




P/E Ratio
24.56779661016949

Market Cap
13616594214.8917


Dividend Yield
1.345291479820628%

Rev. per Employee
346747









More quote details and news »


announced a cybersecurity breach that could impact 143 million U.S. consumers, which equates to roughly 44% of the U.S. population.

The market is responding positively for cyber-security names, including


Symantec



SYMC 2.9923664122137406%



Symantec Corp.


U.S.: Nasdaq


USD33.73


0.98
2.9923664122137406%



/Date(1505250000269-0500)/


Volume (Delayed 15m)
:
9529386



AFTER HOURS



USD33.95


0.220000000000006
0.6522383634746517%


Volume (Delayed 15m)
:
410000




P/E Ratio
N/A

Market Cap
20126184280.3955


Dividend Yield
0.8894159501927068%

Rev. per Employee
331538









More quote details and news »


(ticker: SYMC), which should see a benefit to its LifeLock business.


FireEye’s



FEYE 0.6093845216331505%



FireEye Inc.


U.S.: Nasdaq


USD16.51


0.1
0.6093845216331505%



/Date(1505250000428-0500)/


Volume (Delayed 15m)
:
5352706



AFTER HOURS



USD16.5


-0.0100000000000016
-0.06056935190793458%


Volume (Delayed 15m)
:
54791




P/E Ratio
N/A

Market Cap
2989376840.18433


Dividend Yield
N/A

Rev. per Employee
251833









More quote details and news »


(FEYE) Mandiant has also been reported to have been contracted to investigate the breach. We believe mega-breaches like Equifax (EFX) not only create awareness for the security space, but typically result in an increase in spending by enterprises. Our top picks remain


Proofpoint



PFPT -1.2501370764338195%



Proofpoint Inc.


U.S.: Nasdaq


USD90.05


-1.14
-1.2501370764338195%



/Date(1505250000212-0500)/


Volume (Delayed 15m)
:
543758



AFTER HOURS



USD90.05



%


Volume (Delayed 15m)
:
1801




P/E Ratio
N/A

Market Cap
4051115788.88702


Dividend Yield
N/A

Rev. per Employee
281099









More quote details and news »


(PFPT) and Symantec.

Equifax’s breach occurred between mid-May and July. Customers’ names, Social Security numbers, birth dates, addresses and driver’s license numbers were stolen from the database, with an estimated 209,000 stolen credit-card numbers as well.

This breach is different than many of the other megabreaches we have seen. According to Mark Lanterman, a cyber-security expert and chief executive of Computer Forensic Services, the data stolen in this breach has no shelf life. Unlike credit-card numbers which can be easily cancelled, personal information such as SSN, birth dates, etc. do not change and can be sold and exploited for years. Mr. Lanterman said the data stolen in this breach are already being sold on the dark web for upwards of $1,000, whereas credit-card data typically only fetches $5-$25 per card number.

We believe the Equifax breach brings into question the credibility of using the Equifax credit-monitoring services over other competing services such as LifeLock. With pricing that is largely in line with LifeLock, we believe the breach will result in significant market-share losses going forward for Equifax.

Equifax offers a number of credit monitoring and identity-theft protection services, similar to Symantec’s LifeLock. Equifax’s solutions were launched in 2008, which include ID Patrol for $16.95 a month and ID Patrol Premier for $19.95 a month. The two services are similarly priced to LifeLock, which currently sells the Standard plan for $9.99 a month, Advantage for $19.99 a month and Ultimate Plus for $29.99 a month. The LifeLock plans not only include real-time credit monitoring, but also provide liability compensation and other services.

As is the case with most major breaches, it is being reported that FireEye’s Mandiant incident response team has been contracted to investigate and clean up the breach (according to ZDNET). This should be a positive for FireEye, as incident-response engagement typically results in product sales afterward.

According to Mark Lanterman, he believes the Equifax breach likely started via an email containing a malicious link or attachment. This is consistent with what Proofpoint said last week at their Analyst Day, where 90%-plus of sophisticated attacks target people, largely via email. Proofpoint is one of the only email-security solutions that can detect malicious links and attachments.

— Andrew J. Nowinski
— James E. Fish

The opinions contained in Investors’ Soapbox in no way represent those of Barrons.com or Dow Jones & Company, Inc. The opinions expressed are those of the newsletter’s writer(s) or analysts at research firms. Some of the research firms have provided, or hope to provide, investment-banking or other services to the companies being analyzed.

Comments? E-mail us at online.editors@barrons.com

3 Hot Cybersecurity Stocks in Focus Post Equifax Inc. (EFX) Data Breach

Cybersecurity stocks were seen soaring last Friday, after Equifax Inc. (NYSE:EFX) reported a massive data breach. Per the company, highly sensitive personal data of approximately 143 million consumers has been stolen from its database. Reportedly, nearly two-third of the adult U.S. population has been affected due to this cyber attack.

3 Hot Cybersecurity Stocks in Focus Post Equifax Inc. (EFX) Data Breach

The company late last Thursday announced that a data breach occurred between mid-May and July this year, which was discovered on Jul 29. Apart from some sensitive personal information, hackers have stolen credit card numbers of about 209,000 U.S. consumers and “certain dispute documents with personal identifying information” of nearly 182,000 U.S. consumers.

This is not the first instance when consumer data has been stolen from a company’s data base. However, sensitivity of the information exposed in Equifax’s data breach case makes it one of the worst in recent times. The latest data breach at the company will likely have a lasting impact as criminals can use the stolen resources for opening new accounts, applying for credit cards or loans, buying insurance, renting an apartment or even for tax frauds.

Shares of Equifax plunged nearly 14% last Friday after news of the cyber attack surfaced.

Cybersecurity Stocks Soar

The recent cyber attack at Equifax proved that most organizations across the world lack proper security measures.

Nonetheless, believe it or not, there is a positive side to this episode.  A cyber attack is good news for cybersecurity companies because it increases the chances of security-related purchases by the companies and governments. Hence, investors flock to these shares, shooting up share prices.

Equifax’s Thursday’s announcement gave a sharp boost to cybersecurity stocks, particularly identity protection security providers.

Symantec Corporation (NASDAQ:SYMC), which has been enhancing its identity-theft protection capabilities through acquisitions like LifeLock, gained the most with its shares witnessing a 3.4% rise.

This was followed by FireEye Inc (NASDAQ:FEYE), which is specialized in providing web security, email security, file security and malware analysis. The stock gained 1.5% last Friday.

Another cybersecurity company, Proofpoint Inc (NASDAQ:PFPT), went up 5.8% during trading hours. But it lost its momentum later to close at just 0.3% higher. The company is one of the leading security-as-a-service providers and focuses on cloud-based solutions for threat protection, compliance, archiving & governance, and secure communications.

Fresh Boost for Security Stocks

So far, the year 2017 has witnessed massive cyber attacks, including the two ransomware attacks — WannaCrypt or WannaCry in May and Petya in June — which created global havoc. However, the silver lining to this entire episode will be the further rise in demand for security-related products among enterprises and governments across the world. This is anticipated to drive share prices to new highs in the rest of 2017.

Furthermore, with rapid technological advancement, organizations are increasingly adopting the “bring your own device” (BYOD) policy to enhance employee productivity with anytime/anywhere access. This trend, in turn, calls for stricter data security measures.

We believe the urgency for stricter security measures will compel enterprises, as well as governments to increase spending on cyber security software. According to a Markets and Markets report, worldwide cybersecurity spending will likely reach $101 billion in 2018 and $170 billion by 2020.

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