JPMorgan Impressed with Nvidia's (NASDAQ:NVDA) CES Offerings, But Not Enough

Even though JPMorgan (NYSE:JPM) gushed about the new products introduced by Nvidia (NASDAQ:NVDA) at the CES, it wasn't enough to give them a good rating.

J.P. Morgan wrote in a note to clients, "Amongst chip companies, NVDA has been the center of attention at this year's CES, with a number of smart phones and tablets based on the Tegra 2 apps processor being unveiled. Tegra 2 powers LG's Optimus 2X smart phone, Motorola's Atrix 4G and Droid Bionic smart phones and the Xoom tablet, and Dell's Streak 7 tablet. NVDA indicated that most upcoming Android 3 (Honeycomb)-based tablets will use Tegra 2, implying that NVDA will control a majority share apps processors for tablets in 2011. Given the Tegra 2 traction, we believe NVDA is on track to see the crossover of MCP and Tegra revenues in 1Q11.

"NVDA announced a partnership with ARM to develop products that integrate ARM CPU cores with GPUs to target all computing applications, from smart phones to PCs to HPC. ARM cores offer more efficient computing and lower power consumption than the traditional x86 architecture. Concurrent to this announcement, Microsoft indicated that the upcoming Windows 8 OS will also support the ARM architecture, which lends considerable credibility to NVDA's initiative. NVDA also indicated that Project Denver should incur little to no additional R&D costs since most of the engineering resources from the discontinued MCP product line have been redeployed to the new project."

JPMorgan has an "Underweight" rating on Nvidia, which closed Friday at $19.87, gaining $0.54, or 2.79 percent. JPMorgan has a price target of $13 on them.