Today NVIDIA Corporation (NVDA) in partnership with Adobe Systems Incorporated (ADBE) announced GPU video and graphics acceleration for the Flash player, bringing Internet video to a new class of low-power and high-end PCs and Internet devices.

Together, NVIDIA GPUs including NVIDIA’s GeForce, ION and Tegra products and Adobe Flash Player 10.1 will help device manufacturers deliver Web browsing of rich applications, interactive content and HD video to netbooks, smartbooks and mobile devices such as smartphones to consumers. This will also help lower power consumption.

NVIDIA’s customers using Flash Player 10.1 for their new devices include Hewlett Packard (HPQ), Lenovo, Samsung, Acer and Asus. The company is introducing new products at regular intervals and getting good feedbacks. We expect these orders to drive revenue growth, going forward.

Microsoft (MSFT) had earlier validated NVIDIA ION for its Windows Vista. Moreover, NVIDIA’s GeForce graphics processors have increased overall system performance in Microsoft Windows Vista and in mainstream software applications such as Apple’s (AAPL) iTunes, Adobe Acrobat 8.0, Google (GOOG) Earth and Google Picasa. In addition, Apple may be using NVIDIA’s ION platform for its Mac Mini computers. Thus increasing demand for NVIDIA’s GPU’s is leading to new growth opportunities for the company.

Recently, Senior Zacks analyst Ian T. Gilson increased estimates for NVIDIA for fiscal 2010 and thereafter based on improving PC sales, material revenue from netbooks and first revenue from new products. Moreover, the recently launched Microsoft Zune HD and a series of automobile 3-D navigation systems offered by Volkswagon will use systems developed by NVIDIA. We believe this will add to NVIDIA’s growth.

NVIDIA delivered its first 40nm GPUs to customers in the second quarter. The company is poised for growth through improved cost management, rising demand for graphics chips Incorporatedreased customer orders and product launches.

According to the Semiconductor Industry Association (SIA), global semiconductor sales increased 5% sequentially in August due to a continuing recovery in consumer spending and growing notebook sales.

Thus we remain positive on NVIDIA over the long-term and have a Neutral rating on the stock.

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