Nvidia Jumps Back Above $21 But No Thanks To China

Nvidia could potentially see some of its sales hampered due to technological advances thatIntel and Advanced Micro Devices have made in recent times. An analyst from Pacific Crest has noted that Nvidia’s Q2 2011 sales in China have slowed down. [1]
Who is to blame?
It looks like Intel is having some success with its Sandy Bridge processors which are serving as a replacement for low-end Nvidia GPUs. [1] But it might not stop there.
If AMD experiences success with its own hybrid chips, it could further make a dent in Nvidia’s low end sales. This looks like bit of trouble, but should investors be concerned?

It is estimated that China accounts for 35% of Nvidia’s revenues. [1]However not all of this comes from the discrete graphics business. We estimate that about 20% of Nvidia’s value is attributed to discrete GPUs. If we assume the similar proportion for these, discrete GPUs in China will constitute about 7% to Nvidia’s stock and thus, a relatively smaller value. We are not changing our forecasts quite yet and will investigate further once a clearer trend emerges.
Our price estimate for Nvidia stands at $21.25, implying a premium to market price.