NVIDIA CORPORATION

FORM 10-Q

FOR THE QUARTER ENDED MAY ~~2, 2010~~1, 2011

TABLE OF CONTENTS

			Page
	PART I : FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	a) Condensed Consolidated Statements of ~~Operations~~Income for the three months ended May 1, 2011 and May 2, 2010 ~~and April 26, 2009~~			3
	b) Condensed Consolidated Balance Sheets as of May ~~2, 2010~~1, 2011 and January ~~31, 2010~~30, 2011			4
	c) Condensed Consolidated Statements of Cash Flows for the three months ended May 1, 2011 and May 2, 2010 ~~and April 26, 2009~~			5
	d) Notes to Condensed Consolidated Financial Statements			6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26		24
Item 33..	Quantitative and Qualitative Disclosures About Market Risk	38		33
Item 4.	Controls and Procedures	39		33
	PART II : OTHER INFORMATION
Item 1.	Legal Proceedings	40		34
Item 1A.	Risk Factors	40		34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55		49
~~Item 5.~~	~~Other Information~~	56
Item 6.	Exhibits	57		50
Signature		58		51

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

NVIDIA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~INCOME

(UNAUDITED)

(In thousands, except per share data)

						Three Months Ended
	Three Months Ended					May 1, 2011			May 2, 2010
	May 2, 2010			April 26, 2009
Revenue	$	1,001,813		$	664,231	$	962,039		$	1,001,813
Cost of revenue		545,436			474,535		477,536			545,436
Gross profit		456,377			189,696		484,503			456,377
Operating expenses:
Operating expenses
Research and development		218,105			301,797		231,524			218,105
Sales, general and administrative		90,879			118,864		98,117			90,879
Total operating expenses		308,984			420,661		329,641			308,984
Income (loss) from operations		147,393			(230,965)
Income from operations							154,862			147,393
Interest income		5,571			6,124		5,313			5,571
Other income (expense), net		(2,239	)		20		(3,690	)		(2,239	)
Income (loss) before income tax expense (benefit)		150,725			(224,821)
Income tax expense (benefit)		13,131			(23,483)
Net income (loss)	$	137,594		$	(201,338)
Income before income tax expense							156,485			150,725
Income tax expense							21,266			13,131
Net income						$	135,219		$	137,594

Basic income (loss) per share	$	0.24		$	(0.37)
Basic net income per share						$	0.23		$	0.24
Shares used in basic per share computation		567,183			542,307		594,802			567,183

Diluted income (loss) per share	$	0.23		$	(0.37)
Diluted net income per share						$	0.22		$	0.23
Shares used in diluted per share computation		590,997			542,307		613,474			590,997

See accompanying Notes to Condensed Consolidated Financial ~~Statements~~Statements.

NVIDIA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands)

	May 1, 2011			January 30, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	683,633		$	665,361
Marketable securities		2,042,908			1,825,202
Accounts receivable, net		343,202			348,770
Inventories		380,964			345,525
Prepaid expenses and other		36,600			32,636
Deferred income taxes		9,456			9,456
Total current assets		3,496,763			3,226,950
Property and equipment, net		553,366			568,857
Goodwill		369,844			369,844
Intangible assets, net		278,761			288,745
Deposits and other assets		38,010			40,850
Total assets	$	4,736,744		$	4,495,246

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	346,295		$	286,138
Accrued liabilities and other		634,871			656,544
Total current liabilities		981,166			942,682
Other long-term liabilities		284,813			347,713
Capital lease obligations, long-term		22,957			23,389
Commitments and contingencies - see Note 12		-			-
Stockholders’ equity:
Preferred stock		-			-
Common stock		688			677
Additional paid-in capital		2,638,531			2,500,577
Treasury stock, at cost		(1,487,079	)		(1,479,392	)
Accumulated other comprehensive income		11,121			10,272
Retained earnings		2,284,547			2,149,328
Total stockholders' equity		3,447,808			3,181,462
Total liabilities and stockholders' equity	$	4,736,744		$	4,495,246

See accompanying Notes to Condensed Consolidated Financial Statements.

~~NVIDIA CORPORATION AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED BALANCE SHEETS~~

~~(UNAUDITED)~~

~~(In thousands)~~

May  2, 2010 January 31, 2010
ASSETS
Current assets:
     Cash and cash equivalents

$
447,262

$
447,221

     Marketable securities

1,317,634

1,281,006

     Accounts receivable, net

529,663

374,963

     Inventories

388,139

330,674

     Prepaid expenses and other

35,530

38,214

     Deferred income taxes

8,752

8,752

Total current assets

2,726,980

2,480,830

Property and equipment, net

548,916

571,858

Goodwill

369,844

369,844

Intangible assets, net

115,423

120,458

Deposits and other assets

41,867

42,928

Total assets

$
3,803,030

$
3,585,918

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

     Accounts payable

$
362,740

$
344,527

     Accrued liabilities and other

402,553

439,851

Total current liabilities

765,293

784,378

Other long-term liabilities

152,994

111,950

Capital lease obligations, long term

24,098

24,450

Commitments and contingencies - see Note 12

Stockholders’ equity:

      Preferred stock

—

—

      Common stock

663

653

      Additional paid-in capital

2,288,989

2,219,401

      Treasury stock, at cost

(1,473,655
)

(1,463,268
)
     Accumulated other comprehensive income

10,872

12,172

     Retained earnings

2,033,776

1,896,182

Total stockholders' equity

2,860,645

2,665,140

Total liabilities and stockholders' equity

$
3,803,030

$
3,585,918

~~See accompanying Notes to Condensed Consolidated Financial Statements.~~

NVIDIA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)

	Three Months Ended						Three Months Ended
		May 2, 2010		April 26, 2009				May 1, 2011		May 2, 2010
Cash flows from operating activities:
Net income (loss)	$	137,594		$	(201,338	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Stock-based compensation expense related to stock option purchase		-			135,735
Net income							$	135,219		$	137,594
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		47,147			50,658			47,764			47,147
Stock based compensation expense		25,177			34,113
Tax benefit from stock options		-			(7,595	)
Stock-based compensation expense								31,739			25,177
Other		2,493			1,474			2,195			1,974
Deferred income taxes		14,398			(15,378	)		8,415			14,398
Payments under patent licensing arrangement		(519	)		(88	)
Changes in operating assets and liabilities, net of effects of acquisitions:
Excess tax benefits from stock-based compensation								(13,644)			-
Changes in operating assets and liabilities:
Accounts receivable		(155,011	)		14,171			5,820			(155,011	)
Inventories		(56,816	)		211,233			(35,183	)		(56,816	)
Prepaid expenses and other current assets		2,685			5,414			(3,964	)		2,685
Deposits and other assets		1,061			(4,969	)		3,226			1,061
Accounts payable		16,822			7,250			53,740			16,822
Accrued liabilities and other long-term liabilities		(40,428	)		(88,552	)		(63,127	)		(40,428	)
Net cash provided by (used in) operating activities		(5,397	)		142,128			172,200			(5,397	)
Cash flows from investing activities:
Purchases of marketable securities		(226,963	)		(215,088	)		(427,874	)		(226,963	)
Proceeds from sales and maturities of marketable securities		186,701			226,960			206,946			186,701
Purchases of property and equipment and intangible assets		(17,080	)		(20,777	)		(31,195	)		(17,080	)
Net cash provided by (used in) investing activities		(57,342	)		(8,905	)
Other								(383	)		-
Net cash used in investing activities								(252,506	)		(57,342	)
Cash flows from financing activities:
Payments related to stock option purchase		-			(78,075	)
Proceeds from issuance of common stock under employee stock plans		63,062			39,660			85,286			63,062
Payments under capital lease obligations		(282	)		(222	)		(352	)		(282	)
Net cash provided by (used in) financing activities		62,780			(38,637	)
Excess tax benefits from stock-based compensation								13,644			-
Net cash provided by financing activities								98,578			62,780
Change in cash and cash equivalents		41			94,586			18,272			41
Cash and cash equivalents at beginning of period		447,221			417,688			665,361			447,221
Cash and cash equivalents at end of period	$	447,262		$	512,274		$	683,633		$	447,262

Supplemental disclosures of cash flow information:
Cash paid for income taxes, net	$	1,089		$	919		$	1,404		$	1,089
Cash paid for interest on capital lease obligations	$	795		$	-		$	761		$	795
Other non-cash activities:
Assets acquired by assuming related liabilities								6,416			1,568
Change in unrealized gains from marketable securities	$	(1,298	)	$	1,066		$	850		$	(1,298	)
Assets acquired by assuming related liabilities	$	1,568		$	-

See accompanying Notes to Condensed Consolidated Financial Statements.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 - Summary of Significant Accounting Policies

Basis of ~~presentation~~Presentation

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Securities and Exchange Commission, or SEC, Regulation S-X. In the opinion of management, all adjustments, consisting only of normal recurring adjustments except as otherwise noted, considered necessary for a fair statement of results of operations and financial position have been included. The results for the interim periods presented are not necessarily indicative of the results expected for any future period. The following information should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January ~~31, 2010.~~30, 2011.

Fiscal ~~year~~Year

We operate on a 52 or 53-week year, ending on the last Sunday in January. Fiscal year ~~2011 is a 52-week year, compared to~~2012 and fiscal year ~~2010, which was a 53-week year.~~2011 are both 52-week years. The first quarter of fiscal years ~~2011~~2012 and ~~2010~~2011 are both 13-week quarters.

~~Reclassifications~~

~~Certain prior fiscal year balances have been reclassified to conform to the current fiscal year presentation.~~

Principles of Consolidation

Our condensed consolidated financial statements include the accounts of NVIDIA Corporation and its ~~wholly owned~~wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with ~~accounting principles generally accepted in the United States of America~~U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an on-going basis, we evaluate our estimates, including those related to revenue recognition, cash equivalents and marketable securities, accounts receivable, inventories, income taxes, goodwill, stock-based compensation, warranty liabilities, litigation, investigation and settlement costs and other contingencies. These estimates are based on historical facts and ~~vario us~~various other assumptions that we believe are reasonable.

Revenue Recognition

Product Revenue

We recognize revenue from product sales when persuasive evidence of an arrangement exists, the product has been delivered, the price is fixed or determinable and collection is reasonably assured. For most sales, we use a binding purchase order and in certain cases we use a contractual agreement as evidence of an arrangement. We consider delivery to occur upon shipment provided title and risk of loss have passed to the customer based on the shipping terms. At the point of sale, we assess whether the arrangement fee is fixed ~~and~~or determinable and whether collection is reasonably assured. If we determine that collection of a fee is not reasonably assured, we defer the fee and recognize revenue at the time collection becomes reasonably assured, which is generally upon receipt of payment.

Our policy on sales to certain distributors, with rights of return, is to defer recognition of revenue and related cost of revenue until the distributors resell the ~~product.~~product, as the level of returns cannot be reasonably estimated.

Our customer programs primarily involve rebates, which are designed to serve as sales incentives to resellers of our products in various target markets. We accrue for 100% of the potential rebates and do not apply a breakage factor. We recognize a liability for these rebates at the later of the date at which we record the related revenue or the date at which we offer the rebate. Rebates typically expire six months from the date of the original sale, unless we reasonably believe that the customer intends to claim the rebate. Unclaimed rebates are reversed to revenue.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Our customer programs also include marketing development funds, or MDFs. We account for MDFs as either a reduction of revenue or an operating ~~expense.~~expense, depending on the nature of the program. MDFs represent monies paid to retailers, system builders, original equipment manufacturers, or OEMs, distributors and add-in card partners that are earmarked for market segment development and expansion and typically are designed to support our partners’ activities while also promoting NVIDIA products. Depending on market conditions, we may take actions to increase amounts offered under customer programs, possibly resulting in an incremental reduction of revenue at the time such programs are offered.

We also record a reduction to revenue by establishing a sales return allowance for estimated product returns at the time revenue is recognized, based primarily on historical return rates. However, if product returns for a particular fiscal period exceed historical return rates we may determine that additional sales return allowances are required to properly reflect our estimated exposure for product returns.

License and Development Revenue

For license arrangements that require significant customization of our intellectual property components, we generally recognize this license revenue over the period that services are performed. For all license and service arrangements, we determine progress to completion based on actual direct labor hours incurred to date as a percentage of the estimated total direct labor hours required to complete the project. We periodically evaluate the actual status of each project to ensure that the estimates to complete each contract remain accurate. A provision for estimated losses on contracts is made in the period in which the loss becomes probable and can be reasonably estimated. Costs incurred in advance of revenue recognized are recorded as deferred costs on uncompleted contracts. If the amount billed exceeds the amount of revenue recognized, the excess amount is recorded as deferred revenue. Revenue recognized in any period is dependent on our progress toward completion of projects in progress. Significant management judgment and discretion are used to estimate total direct labor hours. Any changes in or deviations from these estimates could have a material effect on the amount of revenue we recognize in any period.

Royalty revenue is recognized related to the distribution or sale of products that use our technologies under license agreements with third parties. We recognize royalty revenue upon receipt of a confirmation of earned royalties and when collectability is reasonably assured from the applicable licensee.

Inventories

Inventory cost is computed on an adjusted standard basis, which approximates actual cost on an average or first-in, first-out basis. Inventory costs consist primarily of the cost of semiconductors purchased from subcontractors, including wafer fabrication, assembly, testing and packaging, manufacturing support costs, including labor and overhead associated with such purchases, final test yield fallout, inventory provisions and shipping costs. We write down our inventory ~~for estimated~~to the lower of cost or estimated market ~~obsolescence~~value. Obsolete or unmarketable inventory ~~equal to the difference between the cost of inventory and the estimated market value~~is completely written off based upon assumptions about future demand, future product purchase commitments, estimated manufacturing yield levels and market conditions. If actual market conditions are less favorable ~~t han~~than those projected by management, or if our future product purchase commitments to our suppliers exceed our forecasted future demand for such products, additional future inventory write-downs may be required that could adversely affect our operating results. Inventory reserves once established are not reversed until the related inventory has been sold or ~~scrapped, so if~~scrapped. If actual market conditions are more favorable ~~in the fiscal periods subsequent to~~than expected and we sell products that ~~in which~~ we ~~record larger than normal inventory reserves, we may~~ have ~~higher gross margins when products are sold. Sales of such products did not have a significant impact on~~previously written down, our reported gross margin ~~for the three months ended May 2, 2010.~~ would be favorably impacted.

Adoption of New ~~Accounting Pronouncements~~

~~Variable Interest Entities~~

~~During the first quarter of fiscal year 2011, we adopted new accounting guidance which amends the evaluation criteria to identify the primary beneficiary of a variable interest entity, or VIE,~~ and requires ongoing reassessment of whether an enterprise is the primary beneficiary of the VIE. The new guidance significantly changes the consolidation rules for VIEs, including the consolidation of common structures, such as joint ventures, equity method investments and collaboration arrangements. The guidance is applicable to all new and existing VIEs. The adoption of this new accounting guidance did not have a material impact on our consolidated financial position, results of operations or financial condition.

~~NVIDIA CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~Improving Disclosures About Fair Value Measurements~~

During the first quarter of fiscal year 2011, we adopted new accounting guidance which amended the existing disclosure requirements by adding required disclosures about items transferring into and out of levels 1 and 2 in the fair value hierarchy; adding separate disclosures about purchases, sales, issuances, and settlements relative to level 3 measurements; and clarifying, among other things, the existing fair value disclosures about the level of disaggregation. This new guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except for the requirement to provide level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which is effective for fiscal years beginning after December 15, 2010. The adoption of this new accounting guidance impacts only disclosure requiremen ts and did not have an impact on our consolidated financial position, results of operations or financial condition.

~~Revenue Recognition~~

In September 2009, the Financial Accounting Standards Board, or FASB, issued new accounting guidance related to the revenue recognition of multiple element arrangements. The new guidance states that if vendor specific objective evidence or third party evidence for deliverables in an arrangement cannot be determined, companies will be required to develop a best estimate of the selling price to separate deliverables and allocate arrangement consideration using the relative selling price method. In addition, the FASB also issued new accounting guidance related to certain revenue arrangements that include software elements. Previously, companies that sold tangible products with “more than incidental” software were required to apply software revenue recognition guidance. This guidance often delayed revenue recognition for the d elivery of the tangible product. Under the new guidance, tangible products that have software components that are “essential to the functionality” of the tangible product will be excluded from the software revenue recognition guidance. The new guidance will include factors to help companies determine what is “essential to the functionality.” Software-enabled products will now be subject to other revenue guidance and will likely follow the guidance for multiple deliverable arrangements issued by the FASB in September 2009.

We elected to early adopt this accounting guidance at the beginning the first quarter of fiscal year 2011 on a prospective basis and we did not have a significant change in the units of accounting, allocation methodology, or timing of revenue recognition. As a result, the adoption of these accounting standards did not have a material impact on our consolidated financial position, results of operations or financial condition.

Recently Issued Accounting Pronouncements

During the three months ended May ~~2, 2010,~~1, 2011, there ~~has been~~was no recent issuance of accounting pronouncements as compared to those described in ~~the~~our Annual Report on Form 10-K for the fiscal year ended January ~~31, 2010,~~30, 2011 that are of significance, or have potential material significance, to us.

~~Note 2 – Stock Option Purchase~~

During the three months ended April 26, 2009, we completed a cash tender offer for certain employee stock options. The tender offer applied to outstanding stock options held by employees with an exercise price equal to or greater than $17.50 per share. None of the non-employee members of our Board of Directors or our officers who file reports under Section 16(a) of the Securities Exchange Act of 1934, as amended, or the Securities Exchange Act, were eligible to participate in the tender offer. All eligible options with exercise prices equal to or greater than $17.50 per share but less than $28.00 per share were eligible to receive a cash payment of $3.00 per option in exchange for the cancellation of the eligible option. All eligible options with exercise prices equal to or greater than $28.00 per share were eligible to receive a cash payment of $2.00 per option in exchange for the cancellation of the eligible option.

~~Our consolidated statement of operations for the three months ended April 26, 2009 includes stock-based compensation charges related to the stock option purchase (in thousands):~~

Cost of revenue

$
11,412

Research and development

90,456

Sales, general and administrative

38,373

Total

$
140,241

A total of 28.5 million options were tendered under the offer for an aggregate cash purchase price of $78.1 million, which was paid in exchange for the cancellation of the eligible options. As a result of the tender offer, we incurred a charge of $140.2 million consisting of $124.1 million related to the remaining unamortized stock based compensation expense associated with the unvested portion of the options tendered in the offer, $11.6 million related to stock-based compensation expense resulting from amounts paid in excess of the fair value of the underlying options, plus $4.5 million related to associated payroll taxes, professional fees and other costs.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 32 - Stock-Based Compensation

We measure stock-based compensation expense at the grant date of the related equity awards, based on the fair value of the awards, and recognize the expense using the straight-line attribution method over the requisite employee service period adjusted for estimated forfeitures. We estimate the fair value of employee stock options on the date of grant using a binomial model and we use the closing trading price of our common stock on the date of grant as the fair value of awards of restricted stock units, or RSUs. We calculate the fair value of our employee stock purchase plan using the Black-Scholes model.

~~In addition to the stock-based compensation expense related to our cash tender offer to purchase certain employee stock options as described in Note 2 – Stock Option Purchase, our~~Our consolidated statements of operations include stock-based compensation expense, net of amounts capitalized as inventory, as follows:

	Three Months Ended
	May 2, 2010		April 26, 2009			Three Months Ended
	(In thousands)					May 1, 2011		May 2, 2010
Cost of revenue	$	1,803		$	2,230	$	2,477	$	1,803
Research and development		14,614			21,270		18,589		14,614
Sales, general and administrative		8,760			10,613		10,673		8,760
Total	$	25,177		$	34,113	$	31,739	$	25,177

During the three months ended May 1, 2011, we granted approximately 2.9 million stock options, with an estimated total grant-date fair value of $26.6 million and a per option weighted average grant-date fair value of $9.24. During the three months ended May 1, 2011, we granted approximately 3.3 million RSUs, with an estimated total grant-date fair value of $59.6 million and a per RSU weighted average grant-date fair value of $18.18.

During the three months ended May 2, 2010, ~~and April 26, 2009,~~ we granted approximately 2.4 million ~~and 4.9 million~~ stock options, ~~respectively,~~ with an estimated total grant-date fair value of $17.6 million and ~~$27.0 million, respectively, and~~ a per option weighted average grant-date fair value of ~~$7.47 and $5.45, respectively.~~$7.47. During the three months ended May 2, 2010, ~~and April 26, 2009,~~ we granted approximately 2.7 ~~million and 4.6~~ million RSUs, with an estimated total grant-date fair value of $48.5 million and ~~$46.4 million, respectively, and~~ a per RSU weighted average grant-date fair value of ~~$17.94 and $10.17, respectively.~~$17.94.

Of the estimated total grant-date fair value, we estimated that the stock-based compensation expense related to the equity awards that are not expected to vest was ~~$12.2~~$15.4 million and ~~$11.8~~$12.2 million, for the three months ended May 1, 2011 and May 2, 2010 ~~and April 26, 2009,~~ respectively. As of May 1, 2011 and May 2, 2010, ~~and April 26, 2009,~~ the aggregate amount of unearned stock-based compensation expense related to our equity awards was ~~$159.2~~$194.3 million and ~~$130.1~~$159.2 million, respectively, adjusted for estimated forfeitures. As of May 1, 2011 and May 2, 2010, ~~and April 26, 2009,~~ we expect to recognize the unearned stock-based compensation expense related to stock options over an estimated weighted average amortization period of ~~1.8~~2.2 years and ~~2.2~~1.8 years, respectively. As of May 1, 2011 and May 2, 2010, ~~and April 26, 2009,~~ we expect to recognize the unearned stock-based compensation ~~expen se~~expense related to RSUs over an estimated weighted average amortization period of ~~2.4~~2.7 years and ~~2.9~~2.4 years, respectively.

Valuation Assumptions

We utilize a binomial model for calculating the estimated fair value of new stock-based compensation awards granted under our ~~stock option~~equity incentive plans. We have determined that the use of implied volatility is expected to be reflective of market conditions and, therefore, can be expected to be a reasonable indicator of our expected volatility. We also segregate options into groups of employees with relatively homogeneous exercise behavior in order to calculate the best estimate of fair value using the binomial valuation model. As such, the expected term assumption used in calculating the estimated fair value of our stock-based compensation awards using the binomial model is based on detailed historical data about employees' exercise behavior, vesting schedules, and death and disability ~~probabili ties.~~probabilities. Our management believes the resulting binomial calculation provides a reasonable estimate of the fair value of our employee stock options. For our employee stock purchase plan we continue to use the Black-Scholes model.

We estimate forfeitures at the time of grant and revise the estimates of forfeiture, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures are estimated based on historical experience.

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The fair value of stock options granted under our ~~stock option~~equity incentive plans and shares issued under our employee stock purchase plan have been estimated at the date of grant with the following assumptions:

	Three Months Ended
	May 1, 2011			May 2, 2010			~~April 26,~~ ~~2009~~
Stock Options		(Using a binomial model)
~~Weighted average expected~~Expected life ~~of stock options~~ (in years)		~~3.8 - 5.7~~4.4-5.4			~~3.8 - 5.8~~3.8-5.7
Risk free interest rate		~~2.7% - 3.0~~	%	~~1.8% - 2.2~~3.2%-3.8		%		2.7%-3.0	%
Volatility		~~43% - 47~~	%	~~65% - 72~~50%-61		%		43%-47	%
Dividend yield		-		-	-

	Three Months Ended						Three Months Ended
		May 2, 2010			April 26, 2009		May 1, 2011			May 2, 2010
Employee Stock Purchase Plan		(Using a Black-Scholes model)					(Using a Black-Scholes model)
Weighted average expected life of stock options (in years)		0.5 - 2.0		0.5 - 2.0
Expected life (in years)								0.5-2.0		0.5-2.0
Risk free interest rate		0.2% - 0.8	%	0.5% - 1.0		%		0.2%-0.7	%	0.2%-0.8	%
Volatility		45	%	73		%		57	%	45	%
Dividend yield		-		-				-		-

4037

Failure to achieve expected manufacturing yields for our products could negatively impact our financial results and damage our reputation.

Manufacturing yields for our products are a function of product design, which is developed largely by us, and process technology, which typically is proprietary to the manufacturer. Low yields may result from either product design or process technology failure. We do not know a yield problem exists until our design is manufactured. When a yield issue is identified, the product is analyzed and tested to determine the cause. As a result, yield problems may not be identified until well into the production process. Resolution of yield problems requires cooperation by, and communication between, us and the manufacturer. Because of our potentially limited access to wafer foundry capacity, decreases in manufacturing yields could result in an increase in our costs and force us to allocate our available product supply ~~amo ng~~among our customers. Lower than expected yields could potentially harm customer relationships, our reputation and our financial results.

Global economic conditions may adversely affect our business and financial results.

Our operations and performance depend significantly on worldwide economic conditions. Uncertainty about current global economic conditions poses a continuing risk to our business as consumers and businesses have postponed spending in response to tighter credit, negative financial news and/or declines in income or asset values, which have reduced the demand for our products.

Other factors that could depress demand for our products in the future include conditions in the residential real estate and mortgage markets, expectations for inflation, labor and healthcare costs, access to credit, consumer confidence, and other macroeconomic factors affecting consumer and business spending behavior. These and other economic factors have reduced demand for our products in the past and could further harm our business, financial condition and ~~opera ting~~operating results.

The financial turmoil that affected the banking system and financial markets and the increased possibility that financial institutions may consolidate or go out of business resulted in a tightening in the credit markets, a low level of liquidity in many financial markets, and extreme volatility in fixed income, credit, currency and equity markets. There could be a number of follow-on effects from the credit crisis on our business, including insolvency of key suppliers resulting in product delays; inability of customers, including channel partners, to obtain credit to finance purchases of our products and/or customer, including channel partner, insolvencies; and failure of financial institutions, which may negatively impact our treasury operations. Other income and expense could also vary materially from expectations depending on gains or losses realized on the sale or exchange of financial instruments; impairment charges related to debt securities as well as equity and other investments; interest rates; and cash, cash equivalent and marketable securities balances. Volatility in the financial markets and overall economic uncertainty increases the risk that the actual amounts realized in the future on our financial instruments could differ significantly from the fair values currently assigned to them.

Our business is cyclical in nature and has experienced severe downturns that have harmed, and may in the future ~~materially adversely affect~~harm our business and financial results.

Our business is directly affected by market conditions in the highly cyclical semiconductor industry. The semiconductor industry has been adversely affected by many factors, including the global downturn, ongoing efforts by our customers to reduce their spending, diminished product demand, increased inventory levels, lower average selling prices, uncertainty regarding long-term growth rates and underlying financial health and increased competition. These factors, could, among other things, limit our ability to maintain or increase our sales or recognize revenue and in turn adversely affect our business, operating results and financial condition. If our actions to reduce our operating expenses to sufficiently offset these factors when they occur are unsuccessful, our operating results will suffer.

Our failure to estimate customer demand properly could adversely affect our financial results.

We manufacture our products based on forecasts of customer demand in order to have shorter shipment lead times and quicker delivery schedules for our customers. As a result, we may build inventories for anticipated periods of growth which do not occur or may build inventory anticipating demand for a product that does not materialize. In forecasting demand, we make multiple assumptions any of which may prove to be incorrect. Situations that may result in excess or obsolete inventory include:

· •	changes in business and economic conditions, including downturns in the semiconductor industry and/or overall economy;

· •	changes in consumer confidence caused by changes in market conditions, including changes in the credit market, expectations for inflation, and energy prices;

· •	if there were a sudden and significant decrease in demand for our products;

· •	if there were a higher incidence of inventory obsolescence because of rapidly changing technology and customer requirements;

· •	if we fail to estimate customer demand properly for our older products as our newer products are introduced; or

· •	if our competition were to take unexpected competitive pricing actions.

Any inability to sell products to which we have devoted resources could harm our business. In addition, cancellation or deferral of customer purchase orders could result in our holding excess inventory, which could adversely affect our gross margin and restrict our ability to fund operations. Additionally, because we often sell a substantial portion of our products in the last month of each quarter, we may not be able to reduce our inventory purchase commitments in a timely manner in response to customer cancellations or deferrals. We could be subject to excess or obsolete inventories and be required to take corresponding inventory write-downs and/or a reduction in average selling prices if growth slows or does not materialize, or if we incorrectly forecast product demand, which could negatively impact our financial results.

Conversely, if we underestimate our customers’ demand for our products, our third party manufacturing partners may not have adequate lead-time or capacity to increase production for us meaning that we may not be able to obtain sufficient inventory to fill our customers’ orders on a timely basis. Even if we are able to increase production levels to meet customer demand, we may not be able to do so in a cost effective or timely manner. Inability to fulfill our customers’ orders on a timely basis, or at all, could damage our customer relationships, result in lost revenue, cause a loss in market share, impact our customer relationships or damage our reputation, any of which could adversely impact our business.

Because our gross margin for any period depends on a number of factors, our failure to forecast changes in any of these factors could adversely affect our gross margin.

We are focused on improving our gross margin. Our gross margin for any period depends on a number of factors, including:

·	~~the mix of our products sold;~~

the mix of our products sold;

· •	average selling prices;

· •	introduction of new products;

· •	product transitions;

· •	sales discounts;

· •	unexpected pricing actions by our competitors;

· •	the cost of product components; and

· •	the yield of wafers produced by the foundries that manufacture our products.

If we do not correctly forecast the impact of any of the relevant factors on our business, there may not be any actions we can take or we may not be able to take any possible actions in time to counteract any negative impact on our gross margin. In addition, if we are unable to meet our gross margin target for any period or the target set by analysts, the trading price of our common stock may decline.

Our revenue may fluctuate while our operating expenses are relatively fixed, which makes our results difficult to predict and could cause our results to fall short of expectations.

Demand for many of our revenue components fluctuates and is difficult to predict, and our operating expenses are relatively fixed and largely independent of revenue. Therefore, it is difficult for us to accurately forecast revenue and profits or losses in any particular period. Our operating expenses, which are comprised of research and development expenses and sales, general and administrative expenses represented ~~31%~~34.3% and ~~63%,~~30.9% of our total revenue for the first ~~quarters~~quarter of fiscal years ~~2011~~2012 and ~~2010,~~2011 respectively. Since we often recognize a substantial portion of our revenue in the last month of each quarter, we may not be able to adjust our operating expenses in a timely manner in response to any unanticipated revenue shortfalls in any quarter. Further, some of our operating expenses, like stock-based ~~compensat ion~~compensation expense, can only be adjusted over a longer period of time and cannot be reduced during a quarter. If we are unable to reduce operating expenses quickly in response to any revenue shortfalls, our financial results will be negatively impacted.

Any one or more of the risks discussed in this Quarterly Report on Form 10-Q or other factors could prevent us from achieving our expected future revenue or net income. Accordingly, we believe that period-to-period comparisons of our results of operations should not be relied upon as an indication of future performance. Similarly, the results of any quarterly or full fiscal year period are not necessarily indicative of results to be expected for a subsequent quarter or a full fiscal year. As a result, it is possible that in some quarters our operating results could be below the expectations of securities analysts or investors, which could cause the trading price of our common stock to decline. We believe that our quarterly and annual results of operations may continue to be affected by a variety of factors that could harm our revenue, gross profit and results of operations.

~~If we are unable to compete~~Any difficulties in ~~the markets for~~collecting accounts receivable, including from foreign customers, could harm our ~~products, our~~operating results and financial ~~results could be adversely impacted.~~

The market for our products is characterized by rapid technological change, new product introductions, evolving industry standards and declining average selling prices. We believe that the principal competitive factors in this market are performance, breadth of product offerings, access to customers and distribution channels, software support, conformity to industry standard Application Programming Interface, or APIs, manufacturing capabilities, price of processors, and total system costs. We believe that our ability to remain competitive will depend on how well we are able to anticipate the features and functions that customers will demand and whether we are able to deliver consistent volumes of our products at acceptable levels of quality and at competitive prices. We expect competition to increase from both existing comp etitors and new market entrants with products that may be less costly than ours, or may provide better performance or additional features not provided by our products. In addition, it is possible that new competitors or alliances among competitors could emerge and acquire significant market share. We believe other factors impacting our ability to compete are:

·	~~product performance;~~

·	~~product bundling by competitors with multiple product lines;~~

·	~~breadth and frequency of product offerings;~~

·	~~access to customers and distribution channels;~~

·	~~backward-forward software support;~~

·	~~conformity to industry standard application programming interfaces; and~~

·	~~manufacturing capabilities.~~

For example, our MCP products are currently used with both Intel and AMD processors. If we are unable to sell our MCP products for use with certain Intel and AMD processors, we may not be able to successfully compete and our business would be negatively impacted.condition.

~~A significant source of competition is from companies that provide or intend~~Our accounts receivable are highly concentrated and make us vulnerable to ~~provide GPUs~~adverse changes in our customers’ businesses, and ~~mobile~~to downturns in the industry and ~~consumer products. Some~~the worldwide economy. We recorded approximately 12% of our ~~competitors may have greater marketing, financial, distribution and manufacturing resources than we do and may be more able to adapt to~~accounts receivable balance from one customer ~~or technological changes.~~at May 1, 2011.

~~Our current competitors include~~Difficulties in collecting accounts receivable could materially and adversely affect our financial condition and results of operations. These difficulties are heightened during periods when economic conditions worsen. We continue to work directly with more foreign customers and it may be difficult to collect accounts receivable from them. We maintain an allowance for doubtful accounts for estimated losses resulting from the ~~following:~~

·	~~suppliers of GPUs, including chipsets, that incorporate 3D graphics functionality as part of their existing solutions, such as AMD, Intel, Matrox Electronics Systems Ltd., SIS, and VIA; and~~

suppliers of system-on-a-chip products that support tablets, netbooks, PNDs, PMPs, PDAs, cellular phones, handheld devices or embedded devices such as AMD, Broadcom, Freescale Semiconductor Inc., Fujitsu Limited, Imagination Technologies Ltd., Intel, ARM Holdings plc, Marvell Technology Group Ltd, or Marvell, NEC Corporation, Qualcomm Incorporated, Renesas Technology, Samsung, Seiko-Epson, ST Microelectronics, Texas Instruments Incorporated, and Toshiba America, Inc.;

inability of our customers to make required payments. This allowance consists of an amount identified for specific customers and an amount based on overall estimated exposure. If ~~and~~the financial condition of our customers were to ~~the extent we offer products~~deteriorate, resulting in ~~new markets,~~an impairment in their ability to make payments, additional allowances may be required, we may face competition from some of our existing competitors as well as from companies with which we currently do not compete. For example, in the case of our CPB, our Tegra products primarily compete in tablets, smartbooks, smartphonesbe required to defer revenue recognition on sales to affected customers, and ~~other handheld consumer devices. We cannot accurately predict if we will compete successfully in any of the new markets~~ we may ~~enter. If we are unable~~be required to ~~compete in our current or new markets, demand for our products could decrease which could cause our revenue to decline and our financial results to suffer~~.

~~We are dependent on the personal computer market and its rate of growth in the future may have a negative impact on our business.~~

We derive and expect to continue to derive the majority of our revenue from the sale or license of products for use in the desktop personal computer, or PC, and notebook PC markets, including professional workstations. A reduction in sales of PCs, or a reduction in the growth rate of PC sales, may reduce demand for our products. These changes in demand could be large and sudden. Since PC manufacturers often build inventories during periods of anticipated growth, they may be left with excess inventories if growth slows or if they incorrectly forecast product transitions. In these cases, PC manufacturers may abruptly suspend substantially all purchases of additional inventory from suppliers like us until their excess inventory has been absorbed, which would have a negative impact on our financial results.

~~As Intel and AMD continue to pursue platform solutions, we may not be able to successfully compete and our business would be negatively impacted.~~

We expect substantial competition from both Intel’s and AMD’s strategy of selling platform solutions, such as the success Intel achieved with its Centrino platform solution. AMD has also announced a platform solution. Additionally, Intel and AMD have each announced its intention to integrate a central processing unit, or CPU, and a GPU on the same chip or same package, as evidenced by AMD’s announcement of its Fusion processor project and Intel’s announcement of its multichip packaged solution codenamed Arrandale. If AMD and Intel continue to pursue platform solutions, we may not be able to successfully compete and our business would be negatively impacted.

~~Our business results could be adversely affected if the identification and development of new products or entry into or development of a new market is delayed or unsuccessful.~~

In order to maintain or improve our financial results, we will need to continue to identify and develop new products as well as identify and enter new markets. As our GPUs and other processors develop and competition increases, we anticipate that product life cycles at the high end will remain short and average selling prices will decline. In particular, average selling prices and gross margins for our GPUs and other processors could decline as each product matures and as unit volume increases. As a result, we will need to introduce new products and enhancements to existing products to maintain or improve overall average selling prices, our gross margin and our financial results. We believe the success of our new product introductions will depend on many factors outlined elsewhere in these risk factors as well as the f ollowing:

·	~~market demand for new products and enhancements to existing products;~~

·	~~timely completion and introduction of new product designs and new opportunities for existing products;~~

·	~~seamless transitions from an older product to a new product;~~

·	~~differentiation of our new products from those of our competitors;~~

·	~~delays in volume shipments of our products;~~

·	~~market acceptance of our products instead of our customers' products; and~~

·	~~availability of adequate quantity and configurations of various types of memory products.~~

In the past, we have experienced delays in the development and adoption of new products and have been unable to successfully manage product transitions from older to newer products resulting in obsolete inventory.

To be successful, we must also enter new markets or develop new uses for our future or existing products. We cannot accurately predict if our current or existing products or technologies will be successful in the new opportunities or markets that we identify for them or that we will compete successfully in any new markets we may enter. For example, we have developed products and other technology in order for certain general-purpose computing operations to be performed on a GPU rather than a CPU. This general purpose computing, which is often referred to as GP computing, was a new use for the GPU which had been entirely used for graphics rendering. During fiscal year 2008, we introduced our NVIDIA Tesla family of products, which was our entry into the high-performance computing industry, a new market fo r us. During fiscal year 2010, we introduced our next generation CUDA GPU architecture, codenamed “Fermi,” which we expect to be the foundation for computational GPUs and enable breakthroughs in both graphics and parallel computing. Some of our competitors, including Intel, are now developing their own solutions for the discrete graphics and computing markets. Our failure to successfully develop, introduce or achieve market acceptance for new GPUs, other products or other technologies or to enter into new markets or identify new uses for existing or future products, could result in rapidly declining average selling prices, reduced demand for our products or loss of market sharepay higher credit insurance premiums, any of which could ~~cause~~adversely affect our operating results. In the future, we may have to record additional reserves or write-offs and/or defer revenue ~~gross margin and overall financial results to suffer.~~

~~If we are unable to achieve design wins, our products may not be adopted by our target markets or customers either of~~on certain sales transactions which could negatively impact our financial results.

The success of our business depends to a significant extent on our ability to develop new competitive products for our target markets and customers. We believe achieving design wins, which entails having our existing and future products chosen for hardware components or subassemblies designed by OEMs, ODMs, add-in board and motherboard manufacturers, is an integral part of our future success. Our OEM, ODM, and add-in board and motherboard manufacturers’ customers typically introduce new system configurations as often as twice per year, typically based on spring and fall design cycles or in connection with trade shows. Accordingly, when our customers are making their design decisions, our existing products must have competitive performance levels or we must timely introduce new products in order to be included in our customers 217; new system configurations. This requires that we:

·	~~anticipate the features and functionality that customers and consumers will demand;~~

·	~~incorporate those features and functionalities into products that meet the exacting design requirements of our customers;~~

·	~~price our products competitively; and~~

·	~~introduce products to the market within our customers’ limited design cycles.~~

If OEMs, ODMs, and add-in board and motherboard manufacturers do not include our products in their systems, they will typically not use our products in their systems until at least the next design configuration. Therefore, we endeavor to develop close relationships with our OEMs and ODMs, in an attempt to better anticipate and address customer needs in new products so that we will achieve design wins.

~~Our ability~~We obtain credit insurance over the purchasing credit extended to achieve design wins also depends in part on our ability to identify and be compliant with evolving industry standards. Unanticipated changes in industry standards could render our products incompatible with products developed by major hardware manufacturers and software developers like AMD, Intel and Microsoft Corporation, or Microsoft. If our products are not in compliance with prevailing industry standards,certain customers. As a result of the tightening of the credit markets, we may not be ~~designed into~~able to acquire credit insurance on the credit we extend to these customers or in amounts that we deem sufficient. While we have procedures to monitor and limit exposure to credit risk on our customers’ product designs. However, to be compliant with changes to industry standards, we may have to invest significant time and resources to redesign our products which could negatively impact our gross margin or operating results. If we are unable to achieve new design wins for existing or new customers, we may lose market share and our operating results would be negatively impacted.

~~If our products do not continue to be adopted by our target markets or if the demand for new and innovative products in our target markets decreases, our business and operating results would suffer.~~

Our success depends in part upon continued broad adoption of our processors for 3D graphics and multimedia in desktop PC, notebook PC, workstation, high-performance computing, netbooks, smartbooks, tablets, smartphones, and video game console applications. The market for processors has been characterized by unpredictable and sometimes rapid shifts in the popularity of products, often caused by the publication of competitive industry benchmark results, changes in pricing of dynamic random-access memory devices and other changes in the total system cost of add-in boards, as well as by severe price competition and by frequent new technology and product introductions. Broad market acceptance is difficult to achieve and such market acceptance, if achieved, is difficult to sustain due to intense competition and frequent new tech nology and product introductions. As such, our financial results would suffer if for any reason our products do not continue to achieve widespread adoption by the market. If we are unable to complete the timely development of new products or if we were unable to successfully and cost-effectively manufacture and deliver products that meet the requirements of the desktop PC, notebook PC, workstation, high-performance computing, netbook, smartbooks, tablets, smartphones, and video game console markets, we may experience a decrease in revenue which could negatively impact our operating results.

~~Additionally,~~accounts receivable, there can be no assurance ~~that the industry~~such procedures will ~~continue to demand new products with improved standards, features~~effectively limit our credit risk or performance. If our customers, OEMs, ODMs, add-in-card and motherboard manufacturers, system builders and consumer electronics companies, do not continue to design products that require more advanced or efficient processors and/or the market does not continue to demand new products with increased performance, features, functionality or standards, sales of our productsavoid losses, which could ~~decline and the markets for our products could shrink. Decreased sales of our products for these markets could negatively impact our revenue and our financial results.~~

~~If our products contain significant defects our financial results could be negatively impacted, our reputation could be damaged and we could lose market share.~~

Our products are complex and may contain defects or experience failures due to any number of issues in design, fabrication, packaging, materials and/or use within a system. If any of our products or technologies contains a defect, compatibility issue or other error, we may have to invest additional research and development efforts to find and correct the issue. Such efforts could divert our engineers’ attention from the development of new products and technologies and could increase our operating costs and reduce our gross margin. In addition, an error or defect in new products or releases or related software drivers after commencement of commercial shipments could result in failure to achieve market acceptance or loss of design wins. Also, we may be required to reimburse customers, including our customers’ cost s to repair or replace products in the field. A product recall or a significant number of product returns could be expensive, damage our reputation, could result in the shifting of business to our competitors and could result in litigation against us. Costs associated with correcting defects, errors, bugs or other issues could be significant and could materially harm our financial condition or operating results. For example, during fiscal year 2010, we recorded an additional net warranty charge of $95.8 million against cost of revenue to cover anticipated customer warranty, repair, return, replacement and other costs arising from a weak die/packaging material set in certain versions of our previous generation MCP and GPU products used in notebook configurations. This charge included an additional accrual of $164.4 million for related estimated costs, offset by reimbursements from insurance carriers of $68.6 million that we recorded against cost of revenue during fiscal year 2010. During fiscal year 2009, we recorded a net warranty charge of $189.3 million charge against cost of revenue for the purpose of supporting the product repair costs of our affected customers around the world. This charge included an accrual of $196.0 million for related estimated costs, offset by reimbursements from insurance carriers of $6.7 million that we recorded against cost of revenue during fiscal year 2009. In September, October and November 2008, several putative class action lawsuits were filed against us, asserting various claims related to the impacted MCP and GPU products. Please refer to the risk entitled “~~We are subject to litigation arising from alleged defects in our previous generation MCP and GPU products, which if determined adversely to us, could harm our business”~~ ~~for the risk associated with this litigation.~~

4539

We may ~~have~~not be able to ~~invest more resources in research~~attract and ~~development than anticipated, which could increase our operating expenses and negatively impact our operating results.~~

If new competitors, technological advances by existing competitors, our entry into new markets, or other competitive factors require us to invest significantly greater resources than anticipated in our research and development efforts, our operating expenses would increase. Our engineering and technical resources included 3,971 full-timeretain qualified employees as of May 2, 2010 and 3,816 employees as of April 26, 2009, respectively. Research and development expenditures were $218.1 million and $301.8 million for the first quarters of fiscal years 2011 and 2010, respectively. Research and development expenses included stock-based compensation expense of $14.6 million and $21.3 million during the first quarters of fiscal years 2011 and 2010, respectively. Additionally, during the first quarter of fiscal year 20 10, research and development expenses included stock-based compensation of $90.5 million related to the purchase of certain outstanding options that were tendered in March 2009. If we are required to invest significantly greater resources than anticipated in research and development efforts without a corresponding increase in revenue, our operating results could decline. Research and development expenses are likely to fluctuate from time to time to the extent we make periodic incremental investments in research and development and these investments may be independent of our level of revenue which could negatively impact our ~~financial results. In order~~business.

Our future success and ability to ~~remain competitive, we anticipate that we will continue~~compete is substantially dependent on our ability to ~~devote substantial resources to research~~identify, hire, train and ~~development, and we expect these expenses to increase in absolute dollars~~retain highly qualified key personnel. The market for key employees in the ~~foreseeable future due~~technology industry can be competitive. None of our key employees is bound by an employment agreement, meaning our relationships with all of our key employees are at will. The loss of the services of any of our other key employees without an adequate replacement or our inability to hire new employees as needed could delay our product development efforts, harm our ability to sell our products or otherwise negatively impact our business.

In addition, we rely on stock-based awards as a means for recruiting, motivating and retaining highly skilled talent. If the ~~increased complexity~~value of such stock awards does not appreciate as measured by the performance of the price of our common stock or if our share-based compensation otherwise ceases to be viewed as a valuable benefit, our ability to attract, retain, and ~~the greater number~~motivate employees could be weakened, which could harm our results of ~~products under development.~~operations.

We are dependent on third parties for assembly, testing and packaging of our products, which ~~reduces~~reduce our control over the delivery schedule, product quantity or product quality.

Our products are assembled, tested and packaged by independent subcontractors, such as Advanced Semiconductor Engineering, Inc., Amkor Technology, JSI Logistics, Ltd., King Yuan Electronics Co., Siliconware Precision Industries Co. Ltd., and ChipPAC. As a result, we do not directly control our product delivery schedules, product quantity, or product quality. All of these subcontractors assemble, test and package products for other companies, including some of our competitors. Since we do not have long-term agreements with our subcontractors, when demand for subcontractors to assemble, test or package products is high, our subcontractors may decide to prioritize the orders of other customers over our orders. Since the time required to qualify a different subcontractor to assemble, test or package our ~~pr oducts~~products can be lengthy, if we have to find a replacement subcontractor we could experience significant delays in shipments of our products, product shortages, a decrease in the quality of our products, or an increase in product cost. Any product shortages or quality assurance problems could increase the costs of manufacture, assembly or testing of our products, which could cause our gross margin and revenue to decline.

We rely on third-party vendors to supply software development tools to us for the development of our new products and we may be unable to obtain the tools necessary to develop or enhance new or existing products.

We rely on third-party software development tools to assist us in the design, simulation and verification of new products or product enhancements. To bring new products or product enhancements to market in a timely manner, or at all, we need software development tools that are sophisticated enough or technologically advanced enough to complete our design, simulations and verifications. In the past, we have experienced delays in the introduction of products as a result of the inability of then available software development tools to fully simulate the complex features and functionalities of our products. In the future, the design requirements necessary to meet consumer demands for more features and greater functionality from our products may exceed the capabilities of available software development tools. ~~Un availability~~Unavailability of software development tools may result in our missing design cycles or losing design wins, either of which could result in a loss of market share or negatively impact our operating results.

Because of the importance of software development tools to the development and enhancement of our products, a critical component of our product development efforts is our partnerships with leaders in the computer-aided design industry, including Cadence Design Systems, Inc. and Synopsys, Inc. We have invested significant resources to develop relationships with these industry leaders and have often assisted them in the definition of their new products. We believe that forming these relationships and utilizing next-generation development tools to design, simulate and verify our products will help us remain at the forefront of the 3D graphics, communications and networking segments and develop products that utilize leading-edge technology on a rapid basis. If these relationships are not successful, we may be unable to develop new ~~product s~~products or product enhancements in a timely manner, which could result in a loss of market share, a decrease in revenue or negatively impact our operating results.

4640

We ~~sell~~are dependent on the personal computer market and its rate of growth in the future may have a negative impact on our ~~products to a small number of customers and our business could suffer if we lose any of these customers.~~business.

We ~~have a limited number of customers~~derive and ~~our sales are highly concentrated. For the first quarters of fiscal years 2011 and 2010, aggregate sales~~expect to customers in excess of 10% of our total revenue accounted for approximately 28% of total revenue from two customers and approximately 22% of total revenue from two customers, respectively. Although a small number of our other customers representcontinue to derive the majority of our revenue ~~their end customers include~~from the sale or license of products for use in the desktop personal computer, or PC, and notebook PC markets, including professional workstations. A reduction in sales of PCs, or a reduction in the growth rate of PC sales, may reduce demand for our products. These changes in demand could be large ~~number~~and sudden. Since PC manufacturers often build inventories during periods of ~~OEMs, and system integrators throughout the world who, in many cases, specify the graphics supplier. Our sales process involves achieving key design wins~~anticipated growth, they may be left with ~~leading PC, OEMs and major system builders and supporting the product design into high volume production with key contract equipment manufacturers,~~excess inventories if growth slows or CEMs, ODMs, add-in b oard and motherboard manufacturers. These design wins in turn influence the retail and system builder channel that is serviced by CEMs, ODMs, add-in board and motherboard manufacturers. Our distribution strategy is to work with a small number of leading independent CEMs, ODMs, add-in board and motherboard manufacturers, and distributors, each of which has relationships with a broad range of system builders and leading PC OEMs. If we were to lose sales to our PC OEMs, CEMs, ODMs, add-in board manufacturers and motherboard manufacturers and were unable to replace the lost sales with sales to different customers, if they ~~were to significantly reduce the number~~incorrectly forecast product transitions. In these cases, PC manufacturers may abruptly suspend substantially all purchases of ~~products they order~~additional inventory from suppliers like us ~~or if we were unable to collect accounts receivable from them, our revenue may not reach or exceed the expected level in any period,~~until their excess inventory has been absorbed, which ~~could harm~~would have a negative impact on our financial ~~condition~~results.

If our products contain significant defects our financial results could be negatively impacted, our reputation could be damaged and ~~our results of operations.~~we could lose market share.

~~Any difficulties in collecting accounts receivable, including from foreign customers, could harm our operating results and financial condition.~~

Our ~~accounts receivable~~products are ~~highly concentrated~~complex and ~~make us vulnerable~~may contain defects or experience failures due to ~~adverse changes~~any number of issues in ~~our customers’ businesses, and to downturns in the industry and the worldwide economy. We recorded approximately 27%~~design, fabrication, packaging, materials and/or use within a system. If any of our ~~accounts receivable balance from two customers at May 2, 2010~~products or technologies contains a defect, compatibility issue or other error, we may have to invest additional research and ~~approximately 20% of~~development efforts to find and correct the issue. Such efforts could divert our ~~accounts receivable balance from two customers at January 31, 2010.~~

Difficulties in collecting accounts receivable could materially and adversely affect our financial condition and results of operations. These difficulties are heightened during periods when economic conditions worsen. We continue to work directly with more foreign customers and it may be difficult to collect accounts receivable from them. We maintain an allowance for doubtful accounts for estimated losses resultingengineers’ attention from the ~~inability~~development of new products and technologies and could increase our ~~customers~~operating costs and reduce our gross margin. In addition, an error or defect in new products or releases or related software drivers after commencement of commercial shipments could result in failure to ~~make required payments. This allowance consists~~achieve market acceptance or loss of an amount identified for specific customers and an amount based on overall estimated exposure. If the financial condition of our customers were to deteriorate, resulting in an impairment in their ability to make payments, additional allowances may be required,design wins. Also, we may be required to ~~defer~~reimburse customers, including our customers’ costs to repair or replace products in the field. A product recall or a significant number of product returns could be expensive, damage our reputation, could result in the shifting of business to our competitors and could result in litigation against us. Costs associated with correcting defects, errors, bugs or other issues could be significant and could materially harm our financial results. During fiscal years 2011, 2010 and 2009, we recorded net warranty charges of $466.4 million against cost of revenue ~~recognition on sales~~ to ~~affected customers,~~cover anticipated customer warranty, repair, return, replacement and ~~we may be required~~other costs arising from a weak die/packaging material set used in certain versions of our previous generation MCP and GPU products shipped after July 2008 and used in notebook configurations. Please see the risk entitled “We are subject to ~~pay higher credit insurance premiums, any of~~litigation arising from alleged defects in our previous generation MCP and GPU products, which if determined adversely to us, could ~~adversely affect~~harm our ~~operating results. In the future, we~~business” for further information regarding this product defect.

We may have to ~~record additional reserves~~invest more resources in research and development than anticipated, which could increase our operating expenses and negatively impact our operating results.

If new competitors, technological advances by existing competitors, our entry into new markets, or ~~write-offs and/or defer~~other competitive factors require us to invest significantly greater resources than anticipated in our research and development efforts, our operating expenses would increase. Our engineering and technical resources included 4,437 full-time employees as of May 1, 2011 and 3,971 employees as of May 2, 2010, respectively. Research and development expenditures were $231.5 million and $218.1 million for the first quarter of fiscal years 2012 and 2011, respectively. Research and development expenses included stock-based compensation expense of $18.6 million and $14.6 million for the first quarter of fiscal years 2012 and 2011, respectively. If we are required to invest significantly greater resources than anticipated in research and development efforts without a corresponding increase in revenue, ~~on certain sales transactions~~our operating results could decline. Research and development expenses are likely to fluctuate from time to time to the extent we make periodic incremental investments in research and development and these investments may be independent of our level of revenue which could negatively impact our financial results.

~~We obtain credit insurance over the purchasing credit extended~~ In order to ~~certain customers. As a result of the tightening of the credit markets,~~remain competitive, we ~~may not be able to acquire credit insurance on the credit we extend to these customers or in amounts~~anticipate that we ~~deem sufficient. While~~will continue to devote substantial resources to research and development, and we ~~have procedures~~expect these expenses to ~~monitor~~increase in absolute dollars in the foreseeable future due to the increased complexity and limit exposure to credit risk on our accounts receivable, there can be no assurance such procedures will effectively limit our credit risk or avoid losses, which could harm our financial condition or operating results.the greater number of products under development.

We are subject to risks associated with international operations which may harm our business.

We conduct our business worldwide. Our semiconductor wafers are manufactured, assembled, tested and packaged by third-parties located outside of the United States and other Americas. We generated ~~85%~~81% and ~~82%~~85% of our revenue for the first ~~quarters~~quarter of fiscal years ~~2011~~2012 and ~~2010,~~2011, respectively, from sales to customers outside the United States and other Americas. As of May ~~2, 2010,~~1, 2011, we ~~had~~have offices in ~~fifteen~~15 countries outside of the United States. The manufacture, assembly, test and packaging of our products outside of the United States, operation of offices outside of the United States, and sales to customers internationally subjects us to a number of risks, including:

· •	international economic and political conditions, such as political tensions between countries in which we do business;

· •	unexpected changes in, or impositions of, legislative or regulatory requirements;

· •	complying with a variety of foreign laws;

· •	differing legal standards with respect to protection of intellectual property and employment practices;

· •	cultural differences in the conduct of business;

· •	inadequate local infrastructure that could result in business disruptions;

· •	exporting or importing issues related to export or import restrictions, tariffs, quotas and other trade barriers and restrictions;

· •	financial risks such as longer payment cycles, difficulty in collecting accounts receivable and fluctuations in currency exchange rates;

· •	imposition of additional taxes and penalties; and

· •	other factors beyond our control such as terrorism, civil unrest, war and diseases such as severe acute respiratory syndrome and the Avian flu.

If sales to any of our customers outside of the United States and other Americas are delayed or cancelled because of any of the above factors, our revenue may be negatively impacted.

Our international operations in Australia, China, Finland, France, Germany, Hong Kong, India, Japan, Korea, Russia, Singapore, Sweden, Switzerland, Taiwan, and the United Kingdom are subject to many of the above listed risks. Difficulties with our international operations, including finding appropriate staffing and office space, may divert management’s attention and other resources any of which could negatively impact our operating results.

The economic conditions in our primary overseas markets, particularly in Asia, may negatively impact the demand for our products abroad. All of our international sales to date have been denominated in United States dollars. Accordingly, an increase in the value of the United States dollar relative to foreign currencies could make our products less competitive in international markets or require us to assume the risk of denominating certain sales in foreign currencies. We anticipate that these factors will impact our business to a greater degree as we further expand our international business activities.

Conditions outside the control of our independent subcontractors and manufacturers may impact their business operations and thereby adversely interrupt our manufacturing and sales processes.

The economic, market, social, and political situations in countries where certain independent subcontractors and manufacturers are located are unpredictable, can be volatile, and can have a significant impact on our business because we may be unable to obtain or distribute product in a timely manner. Market and political conditions, including currency fluctuation, terrorism, political strife, war, labor disruption, and other factors, including climate change, natural or man-made disasters, adverse changes in tax laws, tariff, import or export quotas, power and water shortages, or interruption in air transportation, in areas where our independent subcontractors and manufacturers are located could also have a severe negative impact on our operating capabilities. For example, because we rely heavily on TSMC to produce a significant portion of our ~~silico n~~silicon wafers, earthquakes, typhoons or other natural disasters in Taiwan and Asia could limit our wafer supply and thereby harm our business, financial condition, and operational results.

~~We are dependent on key employees and the loss of any of these employees could negatively impact our business.~~

Our future success and ability to compete is substantially dependent on our ability to identify, hire, train and retain highly qualified key personnel. The market for key employees in the technology industry can be competitive. None of our key employees is bound by an employment agreement, meaning our relationships with all of our key employees are at will. The loss of the services of any of our other key employees without an adequate replacement or our inability to hire new employees as needed could delay our product development efforts, harm our ability to sell our products or otherwise negatively impact our business.

In addition, we rely on stock-based awards as one means for recruiting, motivating and retaining highly skilled talent. If the value of such stock awards does not appreciate as measured by the performance of the price of our common stock or if our share-based compensation otherwise ceases to be viewed as a valuable benefit, our ability to attract, retain, and motivate employees could be weakened, which could harm our results of operations.

We may not be able to realize the potential financial or strategic benefits of business acquisitions or strategic investments, which could hurt our ability to grow our business, develop new products or sell our products.

We have acquired and invested in other businesses that offered products, services and technologies that we believe will help expand or enhance our existing products and business. Most recently, we announced our intention to acquire Icera Inc., an innovator of baseband processors for 3G and 4G cellular phones and tablets, which is expected to be completed, subject to customary closing conditions, in approximately 30 days from the announcement date. However, there can be no assurance the Icera acquisition will be completed as proposed, or at all. We may enter into future acquisitions of, or investments in, businesses, in order to complement or expand our current businesses or enter into a new business market. Negotiations associated with an acquisition or strategic investment could divert management’s attention and other company resources. Any of the following risks associated with past or future acquisitions or investments could impair our ability to grow our business, develop new products, our ability to sell our products, and ultimately could have a negative impact on our growth or our financial results:

·	~~difficulty in combining the technology, products, operations or workforce of the acquired business with our business;~~

difficulty in combining the technology, products, operations or workforce of the acquired business with our business;

·	~~difficulty in operating in a new or multiple new locations;~~

difficulty in operating in a new or multiple new locations;

·	~~disruption of our ongoing businesses or the ongoing business of the company we invest in or acquire;~~

disruption of our ongoing businesses or the ongoing business of the company we invest in or acquire;

·	~~difficulty in realizing the potential financial or strategic benefits of the transaction;~~

difficulty in realizing the potential financial or strategic benefits of the transaction;

·	~~difficulty in maintaining uniform standards, controls, procedures and policies;~~

difficulty in maintaining uniform standards, controls, procedures and policies;

·	~~disruption of or delays in ongoing research and development efforts;~~

difficulty integrating the target’s accounting, management information, human resources and other administrative systems;

·	~~diversion of capital and other resources;~~

disruption of or delays in ongoing research and development efforts;

·	~~assumption of liabilities;~~

diversion of capital and other resources;

·	~~diversion of resources and unanticipated expenses resulting from litigation arising from potential or actual business acquisitions or investments;~~

assumption of liabilities;

·	~~difficulties in entering into new markets in which we have limited or no experience and where competitors in such markets have stronger positions; and~~

incurring acquisition-related costs or amortization costs for acquired intangible assets that could impact our operating results;

·	~~impairment of relationships with employees and customers, or the loss of any of our key employees or customers our target’s key employees or customers, as a result of our acquisition or investment.~~

diversion of resources and unanticipated expenses resulting from litigation arising from potential or actual business acquisitions or investments;

potential failure of the due diligence processes to identify significant issues with product quality, architecture and development, or legal and financial contingencies, among other things;

difficulties in entering into new markets in which we have limited or no experience and where competitors in such markets have stronger positions; and

incurring significant exit charges if products acquired in business combinations are unsuccessful;

potential inability to obtain, or obtain in a timely manner, approvals from governmental authorities, which could delay or prevent such acquisitions or investments;

potential delay in customer and distributor purchasing decisions due to uncertainty about the direction of our product offerings; and

impairment of relationships with employees, vendors and customers, or the loss of any of our key employees, vendors or customers our target’s key employees, vendors or customers, as a result of our acquisition or investment.

In addition, the consideration for any future acquisition could be paid in cash, shares of our common stock, the issuance of convertible debt securities or a combination of cash, convertible debt and common stock. If we make an investment in cash or use cash to pay for all or a portion of an acquisition, our cash reserves would be reduced which could negatively impact the growth of our business or our ability to develop new products. However, if we pay the consideration with shares of common stock, or convertible debentures, the holdings of our existing stockholders would be diluted. The significant decline in the trading price of our common stock would make the dilution to our stockholders more extreme and could negatively impact our ability to pay the consideration with shares of common stock or convertible debentures. We cannot ~~for ecast~~forecast the number, timing or size of future strategic investments or acquisitions, or the effect that any such investments or acquisitions might have on our operations or financial results.

~~We are exposed to credit risk, fluctuations in~~Our investment portfolio may become impaired by deterioration of the ~~market values of our portfolio investments and in interest rates.~~capital markets.

~~All~~Our cash equivalent and short-term investment portfolio as of our cash equivalents and marketable securities are treated as “available-for-sale” securities. Investments in both fixed rate instruments and floating rate interest earning instruments carry a degree of interest rate risk. Fixed rate securities may have their market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fall short of expectations due to changes in interest rates or if the decline in fair value of our publicly traded debt or equity investments is judged to be other-than-temporary. We may suffer losses in principal if we are forced to sell securities that decline in securities market value due to changes in interest rates. Future declines in the market values of our cash, cash equivalents and marketable securities could have a material adverse effect on our financial condition and operating results.

At May 2, 2010, we had $1.76 billion in cash, cash equivalents and marketable securities. Given the global nature of our business, we have invested both domestically and internationally. All of our investments are denominated in United States dollars. We invest in a variety of financial instruments, consisting principally1, 2011 consisted of cash and cash equivalents, ~~asset-backed securities,~~ commercial paper, mortgage-backed securities issued by Government-sponsored enterprises, ~~equity securities,~~ money market funds and debt securities of corporations, municipalities and the United States government and its agencies. We follow an established investment policy and set of guidelines, designed to preserve principal, minimize risk, monitor and help mitigate our exposure to interest rate and credit risk. The policy sets forth credit quality standards and limits our exposure to any one issuer, as well as our maximum exposure to various asset classes, variety of financial instruments, consisting principally of cash and cash equivalents, commercial paper, mortgage-backed securities issued by Government-sponsored enterprises, money market funds and debt securities of corporations, municipalities and the United States government and its agencies.

Should financial market conditions worsen in the future, investments in some financial instruments may pose risks arising from market liquidity and credit concerns. In addition, any deterioration of the capital markets could cause our other income and expense to vary from expectations. As of May ~~2, 2010,~~1, 2011, we ~~did not have any investments in auction-rate preferred securities.~~

The financial turmoil that affected the banking system and financial markets and the increased possibility that financial institutions might consolidate or go out of business resulted in a tightening in the credit markets, a low level of liquidity in many financial markets, and extreme volatility in fixed income, credit, currency and equity markets. There could be a number of follow-on effects from the credit crisis on our business, including insolvency of key suppliers resulting in product delays; inability of customers, including channel partners, to obtain credit to finance purchases of our products and/or customer, including channel partner, insolvencies; and failure of financial institutions, which may negatively impact our treasury operations. Other income and expense could also va ry materially from expectations depending on gains or losses realized on the sale or exchange of financial instruments;had no material impairment charges related to debt securities as well as equity and other investments; interest rates; and cash, cash equivalent and marketable securities balances. Volatility in the financial markets and economic uncertainty increases the risk that the actual amounts realized in the future onassociated with our financial instruments could differ significantly from the fair values currently assigned to them. As of May 2, 2010, our investments in government agencies and government sponsored enterprises represented approximately 64% of our totalshort-term investment portfolio, ~~while the financial sector accounted for approximately 23%~~and although we believe our current investment portfolio has very little risk of material impairment, we cannot predict future market conditions or market liquidity, or credit availability, and can provide no assurance that our ~~total~~ investment portfolio. Of the financial sector investments, over half are guaranteed by the U.S. government. Substantially all of our investments are with A/A2 or better rated securities. If the fair value of our investments in these sectors was to decline by 2%-5%, fair market values for these investments would decrease by approximately $26-$65 million. portfolio will remain materially unimpaired.

Risks Related to Regulatory, Legal, Our Common Stock and Other Matters

We are subject to litigation arising from alleged defects in our previous generation MCP and GPU products, which if determined adversely to us, could harm our business.

During fiscal years ~~2009~~2011, 2010 and ~~2010,~~2009 we recorded cumulative net warranty charges of $475.9 million, of which $466.4 million has been charged against cost of revenue, to cover anticipated customer warranty, repair, return, replacement and other costs arising from a weak die/packaging material set used in certain versions of our previous generation MCP and GPU products shipped after July 2008 and used in notebook configurations. Although the number of units that we estimate will be impacted by this issue remains consistent with our initial estimates in July 2008, the overall cost of remediation and repair of impacted systems has been higher than originally anticipated. The weak die/packaging material combination is not used in any of our products that are curren tly in production.

The previous generation MCP and GPU products that are impacted were included in a number of notebook products that were shipped and sold in significant quantities. Certain notebook configurations of these MCP and GPU products are failing in the field at higher than normal rates. ~~While we have not been able to determine with certainty a root cause for these failures, testing~~Testing suggests a weak material set of die/package combination, system thermal management designs, and customer use patterns are contributing ~~factors.~~factors for these failures. We have worked with our customers to develop and have made available for download a software driver to cause the system fan to begin operation at the powering up of the system and reduce the thermal stress on these chips. We ~~h ave~~have also recommended to our customers that they consider changing the thermal management of the products in their notebook system designs. We intend to fully support our customers in their repair and replacement of these impacted products that fail, and their other efforts to mitigate the consequences of these failures.

We continue to seek access to our insurance coverage regarding reimbursement to us for some or all of the costs we have incurred and may incur in the future relating to the weak material set. However, there can be no assurance that we will recover any additional reimbursement. We continue to not see any abnormal failure rates in any systems using NVIDIA products other than certain notebook configurations. However, we are continuing to test and otherwise investigate other products. There can be no assurance that we will not discover defects in other products.

In September, October and November 2008, several putative securities class action lawsuits were filed against us, asserting various claims related to the impacted MCP and GPU products. Such lawsuits could result in the diversion of management’s time and attention away from business operations, which could harm our business. In addition, the costs of defense and any damages resulting from this litigation, a ruling against us, or a settlement of the litigation could adversely affect our cash flow and financial results.

We are a party to other litigation, including patent litigation, which, if determined adversely to us, could adversely affect our cash flow and financial results.

We are a party to other litigation as both a defendant and as a plaintiff. For example, we are engaged in litigation with ~~Intel Corporation,~~ Rambus ~~Corporation~~Inc. and with ~~various~~ parties related to our acquisition of 3dfx in 2001. Please refer to Note 12 of the Notes to the ~~Condensed~~ Consolidated Financial Statements for further ~~detail~~details on these lawsuits. There can be no assurance that any litigation to which we are a party will be resolved in our favor. Any claim that is successfully decided against us may cause us to pay substantial damages, including punitive damages, and other related fees or prevent us from selling or importing certain of our products. Regardless of whether lawsuits are resolved in our favor or if we are the plaintiff or the ~~defe ndant~~defendant in the litigation, any lawsuits to which we are a party will likely be expensive and time consuming to defend or resolve. Such lawsuits could also harm our relationships with existing customers and result in the diversion of management’s time and attention away from business operations, which could harm our business. Costs of defense and any damages resulting from litigation, a ruling against us, or a settlement of the litigation could adversely affect our cash flow and financial results.

Changes in United States tax legislation regarding our foreign earnings could materially impact our business.

Currently, a majority of our revenue is generated from customers located outside the United States, and a significant portion of our assets, including employees, are located outside the United States. United States income taxes and foreign withholding taxes have not been provided on undistributed earnings for certain non-United States subsidiaries, because such earnings are intended to be indefinitely reinvested in the operations of those subsidiaries. Throughout the period of President Obama’s administration, the White House has ~~released~~proposed various international tax ~~proposals that~~legislation, some of which, if enacted into law would substantially reduce our ability to defer United States taxes on such indefinitely ~~reinvestment~~reinvested non-United States earnings, ~~eliminate or substantially reduce our ability to claim foreign tax credits, and/or~~ eliminate certain tax deductions until ~~fo reign~~foreign earnings are repatriated to the United ~~States.~~States and/or otherwise cause the total tax cost of U.S. multinational corporations to increase. If ~~any of~~ these or similar proposals are constituted into legislation in the current or future year(s), they could have a negative impact on our financial position and results of operations.

Our operating results may be adversely affected if we are subject to unexpected tax liabilities.

We are subject to taxation by a number of taxing authorities both in the United States and throughout the world. Tax rates vary among the jurisdictions in which we operate. Significant judgment is required in determining our provision for our income taxes as there are many transactions and calculations where the ultimate tax determination is uncertain. Although we believe our tax estimates are reasonable, any of the below could cause our effective tax rate to be materially different than that which is reflected in historical income tax provisions and accruals:

●	the jurisdictions in which profits are determined to be earned and taxed;
●	adjustments to estimated taxes upon finalization of various tax returns;
●	changes in available tax credits;
●	changes in share-based compensation expense;
●	changes in tax laws, the interpretation of tax laws either in the United States or abroad or the issuance of new interpretative accounting guidance related to uncertain transactions and calculations where the tax treatment was previously uncertain; and
●	the resolution of issues arising from tax audits with various tax authorities.

Should additional taxes be assessed as a result of any of the above, our operating results could be adversely affected. In addition, our future effective tax rate could be adversely affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in tax laws or changes in the interpretation of tax laws.

Litigation to defend against alleged infringement of intellectual property rights or to enforce our intellectual property rights and the outcome of such litigation could result in substantial costs to us.

We expect that as the number of issued hardware and software patents increases and as competition intensifies, the volume of intellectual property infringement claims and lawsuits may increase. We may in the future become involved in lawsuits or other legal proceedings alleging patent infringement or other intellectual property rights violations by us or by our customers that we have agreed to indemnify them for certain claims of infringement.

An unfavorable ruling in any such intellectual property related litigation could include significant damages, invalidation of a patent or family of patents, indemnification of customers, payment of lost profits, or, when it has been sought, injunctive relief.

In addition, in the future, we may need to commence litigation or other legal proceedings in order to:

·	~~assert claims of infringement of our intellectual property;~~

• assert claims of infringement of our intellectual property;

·	~~enforce our patents;~~

• enforce our patents;

·	~~protect our trade secrets or know-how; or~~

• protect our trade secrets or know-how; or

·	~~determine the enforceability, scope and validity of the propriety rights of others.~~

• determine the enforceability, scope and validity of the propriety rights of others.

If we have to initiate litigation in order to protect our intellectual property, our operating expenses may increase which could negatively impact our operating results. Our failure to effectively protect our intellectual property could harm our business.

If infringement claims are made against us or our products are found to infringe a third parties’ patent or intellectual property, we or one of our indemnified customers may have to seek a license to the third parties’ patent or other intellectual property rights. However, we may not be able to obtain licenses at all or on terms acceptable to us particularly from our competitors. If we or one of our indemnified customers is unable to obtain a license from a third party for technology that we use or that is used in one of our products, we could be subject to substantial liabilities or have to suspend or discontinue the manufacture and sale of one or more of our products. We may also have to make royalty or other payments, or cross license our technology. If these arrangements are not concluded on ~~commerciall y~~commercially reasonable terms, our business could be negatively impacted. Furthermore, the indemnification of a customer may increase our operating expenses which could negatively impact our operating results.

Our ability to compete will be harmed if we are unable to adequately protect our intellectual property.

We rely primarily on a combination of patents, trademarks, trade secrets, employee and third-party nondisclosure agreements, and licensing arrangements to protect our intellectual property in the United States and internationally. We have numerous patents issued, allowed and pending in the United States and in foreign jurisdictions. Our patents and pending patent applications primarily relate to our products and the technology used in connection with our products. We also rely on international treaties, organizations and foreign laws to protect our intellectual property. The laws of certain foreign countries in which our products are or may be manufactured or sold, including various countries in Asia, may not protect our products or intellectual property rights to the same extent as the laws of the United States. This makes the possibility of piracy of our technology and products more likely. We continuously assess whether and where to seek formal protection for particular innovations and technologies based on such factors as:

· •	the commercial significance of our operations and our competitors’ operations in particular countries and regions;

· •	the location in which our products are manufactured;

· •	our strategic technology or product directions in different countries; and

· •	the degree to which intellectual property laws exist and are meaningfully enforced in different jurisdictions.

Our pending patent applications and any future applications may not be approved. In addition, any issued patents may not provide us with competitive advantages or may be challenged by third parties. The enforcement of patents by others may harm our ability to conduct our business. Others may independently develop substantially equivalent intellectual property or otherwise gain access to our trade secrets or intellectual property. Our failure to effectively protect our intellectual property could harm our business.

Government investigations and inquiries from regulatory agencies could lead to enforcement actions, fines or other penalties and could result in litigation against us.

In the past, we have been subject to government investigations and inquiries from regulatory agencies such as the Department of Justice and the SEC. We may be subject to government investigations and receive additional inquiries from regulatory agencies in the future, which may lead to enforcement actions, fines or other penalties.

In addition, litigation has often been brought against a company in connection with the announcement of a government investigation or inquiry from a regulatory agency. Such lawsuits could result in the diversion of management’s time and attention away from business operations, which could harm our business. In addition, the costs of defense and any damages resulting from litigation, a ruling against us, or a settlement of the litigation could adversely affect our cash flow and financial results.

We are subject to the risks of owning real property.

During fiscal year 2009, we purchased real property in Santa Clara, California that includes approximately 25 acres of land and ten commercial buildings. We also own real property in China and India. We have limited experience in the ownership and management of real property and are subject to the risks of owning real property, including:

· •	the possibility of environmental contamination and the costs associated with mitigating any environmental problems;

· •	adverse changes in the value of these properties, due to interest rate changes, changes in the market in which the property is located, or other factors;

· •	the risk of loss if we decide to sell and are not able to recover all capitalized costs;

· •	increased cash commitments for the possible construction of a campus;

· •	the possible need for structural improvements in order to comply with zoning, seismic and other legal or regulatory requirements;

· •	increased operating expenses for the buildings or the property or both;

· •	possible disputes with third parties, such as neighboring owners or others, related to the buildings or the property or both; and

· •	the risk of financial loss in excess of amounts covered by insurance, or uninsured risks, such as the loss caused by damage to the buildings as a result of earthquakes, floods and or other natural disasters.

Expensing employee equity compensation adversely affects our operating results and could also adversely affect our competitive position.

Since inception, we have used equity through our equity incentive plans and our employee stock purchase program as a fundamental component of our compensation packages. We believe that these programs directly motivate our employees and, through the use of vesting, encourage our employees to remain with us.

We record compensation expense for stock options, restricted stock units and our employee stock purchase plan using the fair value of those awards in accordance with generally accepted accounting principles in United States of America, or U.S. GAAP. Stock-based compensation expense was ~~$25.2~~$31.7 million and ~~$34.1~~$25.2 million for the first ~~quarters~~quarter of fiscal years ~~2011~~2012 and ~~2010,~~2011, respectively, related to on-going vesting of equity awards, which negatively impacted our operating results. Additionally, in March 2009, we completed a cash tender offer to purchase certain employee stock options. A total of 28.5 million options were tendered under the offer for an aggregate cash purchase price of $78.1 million, in exchange for the cancellation of the eligible options. As a result of the tender offer, we incurred a charge o f $140.2 million consisting of the remaining unamortized stock based compensation expense associated with the unvested portion of the options tendered in the offer, stock-based compensation expense resulting from amounts paid in excess of the fair value of the underlying options, plus associated payroll taxes and professional fees. We believe that expensing employee equity compensation will continue to negatively impact our operating results.

To the extent that expensing employee equity compensation makes it more expensive to grant stock options and restricted stock units or to continue to have an employee stock purchase program, we may decide to incur increased cash compensation costs. In addition, actions that we may take to reduce stock-based compensation expense that may be more severe than any actions our competitors may implement and may make it difficult to attract retain and motivate employees, which could adversely affect our competitive position as well as our business and operating results.

We may be required to record a charge to earnings if our goodwill or amortizable intangible assets become impaired, which could negatively impact our operating results.

Under U.S. GAAP, we review our amortizable intangible assets and goodwill for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill is tested for impairment at least annually. The carrying value of our goodwill or amortizable assets from acquisitions may not be recoverable due to factors such as a decline in stock price and market capitalization, reduced estimates of future cash flows and slower growth rates in our industry or in any of our business units. Estimates of future cash flows are based on an updated long-term financial outlook of our operations. However, actual performance in the near-term or long-term could be materially different from these forecasts, which could impact future estimates. For example, if one of our business units does not meet its near-term ~~an d~~and longer-term forecasts, the goodwill assigned to the business unit could be impaired. We may be required to record a charge to earnings in our financial statements during a period in which an impairment of our goodwill or amortizable intangible assets is determined to exist, which may negatively impact our results of operations.

Our stock price continues to be volatile and investors may suffer losses.

Our stock has at times experienced substantial price volatility as a result of variations between our actual and anticipated financial results, announcements by us and our competitors, or uncertainty about current global economic conditions. The stock market as a whole also has experienced extreme price and volume fluctuations that have affected the market price of many technology companies in ways that may have been unrelated to these companies’ operating performance.

In the past, securities class action litigation has often been brought against a company following periods of volatility in the market price of its securities. For example, following our announcement in July 2008 that we would take a charge against cost of revenue to cover anticipated costs and expenses arising from a weak die/packaging material set in certain versions of our previous generation MCP and GPU products and that we were revising financial guidance for our second fiscal quarter of 2009, the trading price of our common stock declined. In September, October and November 2008, several putative class action lawsuits were filed against us relating to this announcement. Please refer to Note 12 of the Notes to ~~Condensed~~the Consolidated Financial Statements for further information regarding these lawsuits. Due to changes in the potential volatility of our stock price, we may be the target of securities litigation in the future. Such lawsuits could result in the diversion of management’s time and attention away from business operations, which could harm our business. In addition, the costs of defense and any damages resulting from litigation, a ruling against us, or a settlement of the litigation could adversely affect our cash flow and financial results.

~~Our operating results may be adversely affected if we are subject to unexpected tax liabilities.~~

·	~~the jurisdictions in which profits are determined to be earned and taxed;~~
·	~~adjustments to estimated taxes upon finalization of various tax returns;~~

·	~~changes in available tax credits;~~
·	~~changes in share-based compensation expense;~~

·	changes in tax laws, the interpretation of tax laws either in the United States or abroad or the issuance of new interpretative accounting guidance related to uncertain transactions and calculations where the tax treatment was previously uncertain; and
·	~~the resolution of issues arising from tax audits with various tax authorities.~~

5347

Our failure to comply with any applicable environmental regulations could result in a range of consequences, including fines, suspension of production, excess inventory, sales limitations, and criminal and civil liabilities.

We are subject to various state, federal and international laws and regulations governing the environment, including restricting the presence of certain substances in electronic products and making producers of those products financially responsible for the collection, treatment, recycling and disposal of those products. ~~For example,~~Although our management systems are designed to maintain compliance, we ~~are subject to the European Union Directive on Restriction of Hazardous Substances Directive,~~cannot assure you that we have been or ~~RoHS Directive, that restricts the use of a number of substances, including lead,~~will be at all times in complete compliance with such laws and other hazardous substances in electrical and electronic equipment in the market in the European Union. We could face significant costs and liabilities in connection with the European Union Directive on Waste Electrical and Electronic Equipment,regulations. If we violate or WEEE. The WEEE directs members of the European Union to enact laws, regulations, and administrative provisions to ensure that producers of electric and electronic equipment are financially responsible for the collection, recycling, treatment and environmentally responsible disposal of certain products sold into the market after August 15, 2005.

It is possible that unanticipated supply shortages, delays or excess non-compliant inventory may occur as a result of the RoHS Directive, WEEE, and other domestic or international environmental regulations. Failurefail to comply with any ~~applicable environmental regulations could result in~~of them, a range of consequences could result, including ~~costs,~~ fines, ~~suspension of production, excess inventory,~~import/export restrictions, sales limitations, criminal and civil liabilities or other sanctions. We could also be held liable for any and all consequences arising out of exposure to hazardous materials used, stored, released, disposed of by us or located at, under or emanating from our facilities or other environmental or natural resource damage.

Environmental laws are complex, change frequently and have tended to become more stringent over time. For example, the European Union and China are two among a growing number of jurisdictions that have enacted in recent years restrictions on the use of lead, among other chemicals, in electronic products. These regulations affect semiconductor packaging. There is a risk that the cost, quality and manufacturing yields of lead-free products may be less favorable compared to lead-based products or that the transition to lead-free products may produce sudden changes in demand, which may result in excess inventory.

There is also a movement to improve the transparency and accountability concerning the supply of minerals coming from the conflict zones of the Democratic Republic of Congo. New U.S. legislation includes disclosure requirements regarding the use of “conflict” minerals mined from the Democratic Republic of Congo and adjoining countries and procedures regarding a manufacturer’s efforts to prevent the sourcing of such “conflict” minerals. The implementation of these requirements could ~~impact our ability to conduct business~~affect the sourcing and availability of minerals used in the ~~countries~~manufacture of semiconductor devices. As a result, there may only be a limited pool of suppliers who provide conflict free metals, and we cannot assure you that we will be able to obtain products in sufficient quantities or ~~states that have adopted these types~~at competitive prices. Also, since our supply chain is complex, we may face reputational challenges with our customers and other stockholders if we are unable to sufficiently verify the origins for all metals used in our products.

Future environmental legal requirements may become more stringent or costly and our compliance costs and potential liabilities arising from past and future releases of, ~~regulations.~~or exposure to, hazardous substances may harm our business and our reputation.

While we believe that we have adequate internal control over financial reporting, if we or our independent registered public accounting firm determines that we do not, our reputation may be adversely affected and our stock price may decline.

Section 404 of the Sarbanes-Oxley Act of 2002 requires our management to report on, and our independent registered public accounting firm to audit, the effectiveness of our internal control structure and procedures for financial reporting. We have an ongoing program to perform the system and process evaluation and testing necessary to comply with these requirements. However, the manner in which companies and their independent public accounting firms apply these requirements and test companies’ internal controls remains subject to some judgment. To date, we have incurred, and we expect to continue to incur, increased expense and to devote additional management resources to Section 404 compliance. Despite our efforts, if we identify a material weakness in our internal controls, there can be no assurance that we will be ~~a ble~~able to remediate that material weakness in a timely manner, or that we will be able to maintain all of the controls necessary to determine that our internal control over financial reporting is effective. In the event that our chief executive officer, chief financial officer or our independent registered public accounting firm determine that our internal control over financial reporting is not effective as defined under Section 404, investor perceptions of us may be adversely affected and could cause a decline in the market price of our stock.

Changes in financial accounting standards or interpretations of existing standards could affect our reported results of operations.

We prepare our consolidated financial statements in conformity with ~~U.S.GAAP.~~U.S GAAP. These principles are constantly subject to review and interpretation by the SEC and various bodies formed to interpret and create appropriate accounting principles. A change in these principles can have a significant effect on our reported results and may even retroactively affect previously reported transactions. Additionally, changes in existing accounting rules or practices, including the possible conversion to unified international accounting standards, could have a significant adverse effect on our results of operations or the manner in which we conduct our business.

Provisions in our certificate of incorporation, our bylaws and our agreement with Microsoft could delay or prevent a change in control.

Our certificate of incorporation and bylaws contain provisions that could make it more difficult for a third party to acquire a majority of our outstanding voting stock. These provisions include the following:

· •	the ability of our Board to create and issue preferred stock without prior stockholder approval;

· •	the prohibition of stockholder action by written consent;

· •	a classified Board; and

· •	advance notice requirements for director nominations and stockholder proposals.

On March 5, 2000, we entered into an agreement with Microsoft in which we agreed to develop and sell graphics chips and to license certain technology to Microsoft and its licensees for use in the Xbox. Under the agreement, if an individual or corporation makes an offer to purchase shares equal to or greater than 30% of the outstanding shares of our common stock, Microsoft may have first and last rights of refusal to purchase the stock. The Microsoft provision and the other factors listed above could also delay or prevent a change in control of NVIDIA.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

~~During fiscal year 2005, we announced that our~~ Our Board of Directors ~~or Board, had~~has authorized ~~a stock repurchase program to repurchase shares of our common stock,~~us, subject to certain specifications, up to an aggregate maximum amount of $300 million. During fiscal year 2007, the Board further approved an increase of $400 million to the original stock repurchase program. In fiscal year 2008, we announced a stock repurchase program under which we may purchase up to an additional $1.0 billion of our common stock over a three year period through May 2010. On August 12, 2008, we announced that our Board further authorized an additional increase of $1.0 billion to the stock repurchase program. As a result of these increases, we have an ongoing authorization from the Board, subject to certain s pecifications, to repurchase shares of our common stock up to an aggregate maximum amount of $2.7 billion through May ~~2010. On March 16, 2010, our Board further authorized an extension of the stock repurchase program from May 2010 to May~~ 2013.

The repurchases will be made from time to time in the open market, in privately negotiated transactions, or in structured stock repurchase programs, and may be made in one or more larger repurchases, in compliance with Rule 10b-18 ~~under~~of the Securities Exchange Act of 1934, as amended, subject to market conditions, applicable legal requirements, and other factors. The program does not obligate NVIDIA to acquire any particular amount of common stock and the program may be suspended at any time at our discretion. As part of our share repurchase program, we have entered into, and we may continue to enter into, structured share repurchase transactions with financial institutions. These agreements generally require that we make an up-front payment in exchange for the right to ~~receiv e~~receive a fixed number of shares of our common stock upon execution of the agreement, and a potential incremental number of shares of our common stock, within a pre-determined range, at the end of the term of the ~~agreement~~agreement.

~~During the first three months of fiscal year 2011, we~~We did not enter into any structured share repurchase transactions or otherwise purchase any shares of our common ~~stock. Through~~stock during the first ~~three months~~quarter of fiscal year 2012. Through May 1, 2011, we have repurchased an aggregate of 90.9 million shares under our stock repurchase program for a total cost of $1.46 billion. As of May ~~2, 2010,~~1, 2011, we are authorized, subject to certain specifications, to repurchase shares of our common stock up to an additional amount of $1.24 billion through May 2013.

Additionally, during the first quarter of fiscal ~~year 2011,~~2012, we granted approximately ~~2.4~~2.9 million stock options and ~~2.7~~3.3 million restricted stock units, or RSUs, under the 2007 Equity Incentive Plan. In March 2009, we completed a cash tender offer for 28.5 million options held by our employees. Please refer to Note 2 and Note 3 of the Notes to Condensed Consolidated Financial Statements for further information regarding stock-based compensation related to our March 2009 stock option purchase and related to equity awards granted under our equity incentive programs.

~~ITEM 5. OTHER INFORMATION~~

At the Annual Meeting of Stockholders held on May 19, 2010 the following proposals were adopted by the margin indicated. Proxies for the Annual Meeting were solicited pursuant to Section 14(a) of the Securities Exchange Act and there was no solicitation in opposition of management’s solicitation.

~~1. The election of three (3) directors to serve for a three-year term until the 2013 Annual Meeting of Stockholders. The results of the voting were as follows:~~

a.	~~James C. Gaither~~
	~~Number of shares For~~	~~395,012,884~~
	~~Number of shares Withheld~~	~~647,570~~
~~Number of shares Abstaining~~		~~3,589,645~~
~~Number of Broker Non-Votes~~		~~68,425,042~~

b.	~~Jen-Hsun Huang~~
	~~Number of shares For~~	~~395,304,525~~
	~~Number of shares Withheld~~	~~438,441~~
~~Number of shares Abstaining~~		~~3,507,133~~
~~Number of Broker Non-Votes~~		~~68,425,042~~

c.	~~A. Brooke Seawell~~
	~~Number of shares For~~	~~394,774,347~~
	~~Number of shares Withheld~~	~~560,169~~
~~Number of shares Abstaining~~		~~3,915,583~~
~~Number of Broker Non-Votes~~		~~68,425,042~~

~~The other directors whose term of office as a director continued after the Annual Meeting of Stockholders are Harvey C. Jones, William J. Miller, Tench Coxe, Mark L. Perry and Mark A. Stevens.~~

2.	~~The ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered accounting firm for our fiscal year ending January 30, 2011. The results of the voting were as follows:~~

~~Number of shares voted For~~	~~467,054,082~~
~~Number of shares voted Against~~	~~389,980~~
~~Number of shares Abstaining~~	~~231,079~~
~~Number of Broker Non-Votes~~	0

5649

ITEM 6. EXHIBITS

EXHIBIT INDEX

				~~Incorporated by Reference~~
~~Exhibit No.~~			~~Exhibit Description~~	~~Schedule/Form~~	~~File Number~~	~~Exhibit~~	~~Filing Date~~

	~~31.1~~	*	~~Certification of Chief Executive Officer as required by Rule 13a-14(a) of the Securities Exchange Act of 1934~~

	~~31.2~~	*	~~Certification of Chief Financial Officer as required by Rule 13a-14(a) of the Securities Exchange Act of 1934~~

	~~32.1#~~	*	~~Certification of Chief Executive Officer as required by Rule 13a-14(b) of the Securities Exchange Act of 1934~~

	~~32.2#~~	*	~~Certification of Chief Financial Officer as required by Rule 13a-14(b) of the Securities Exchange Act of 1934~~

	~~101.INS+~~	*	~~XBRL Instance Document~~

	~~101.SCH+~~	*	~~XBRL Taxonomy Extension Schema Document~~

	~~101.CAL+~~	*	~~XBRL Taxonomy Extension Calculation Linkbase Document~~

	~~101.LAB+~~	*	~~XBRL Taxonomy Extension Labels Linkbase Document~~

	~~101.PRE+~~	*	~~XBRL Taxonomy Extension Presentation Linkbase Document~~

Incorporated by Reference

Exhibit No.

Exhibit Description

Schedule/Form

File Number

Exhibit

Filing Date

3.1

Certificate of Amendment of Amended and Restated Certificate of Incorporation of NVIDIA Corporation

8-K

0-23985

3.1

05/24/2011

3.2

Amended and Restated Bylaws of NVIDIA Corporation

8-K

0-23985

3.2

05/24/2011

10.38

Transition and Consulting Agreement, dated March 15, 2011, between David L.White and NVIDIA Corporation

8-K

0-23985

10.1

03/15/2011

10.39+

Fiscal Year 2012 Variable Compensation Plan

8-K

0-23985

10.1

03/25/2011

10.40+

Offer Letter, dated March 16, 2011, between NVIDIA Corporation and Michael Byron

8-K

0-23985

10.2

03/25/2011

10.41+*

2007 Equity Incentive Plan - Non Statutory Stock Option (Annual Grant - Board Service)

31.1*

Certification of Chief Executive Officer as required by Rule 13a-14(a) of the Securities Exchange Act of 1934

31.2*

Certification of Chief Financial Officer as required by Rule 13a-14(a) of the Securities Exchange Act of 1934

32.1#*

Certification of Chief Executive Officer as required by Rule 13a-14(b) of the Securities Exchange Act of 1934

32.2#*

Certification of Chief Financial Officer as required by Rule 13a-14(b) of the Securities Exchange Act of 1934

101.INS*

XBRL Instance Document

101.SCH*±

XBRL Taxonomy Extension Schema Document

101.CAL*±

XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB*±

XBRL Taxonomy Extension Labels Linkbase Document

101.PRE*±

XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF*±

XBRL Taxonomy Extension Definition Linkbase Document

* Filed ~~Herewith~~herewith.

+ Pursuant to applicable securities laws and regulations, the Company is deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and is not subject to liability under any anti-fraud provisions of the federal securities laws as long as the Company has made a good faith attempt to comply with the submission requirements and promptly amends the interactive data files after becoming aware that the interactive data files fails to comply with the submission requirements. Users of this data are advised that, pursuant to Rule 406T, these interactive data files are deemed not filed and otherwise are not subject to liability.Management contract or compensatory plan or arrangement.

# In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release Nos. 33-8238 and 34-47986, Final Rule: Management’s Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purpose of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

~~Copies of above exhibits not contained herein are available to any stockholder upon written request to:~~

~~Investor Relations: NVIDIA Corporation, 2701 San Tomas Expressway, Santa Clara, CA 95050.~~

~~SIGNATURE~~±

~~Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.~~

~~Date: May 21, 2010~~
~~NVIDIA Corporation~~
~~By:~~	~~/s/ DAVID L. WHITE~~
	~~David L. White~~
	~~(Duly Authorized Officer and Principal Financial and Accounting Officer)~~

~~EXHIBIT INDEX~~

~~Incorporated by Reference~~

~~Exhibit No.~~

~~Exhibit Description~~

~~Schedule/Form~~

~~File Number~~

~~Exhibit~~

~~Filing Date~~

~~31.1~~

~~Certification of Chief Executive Officer as required by Rule 13a-14(a) of the Securities Exchange Act of 1934~~

~~31.2~~

~~Certification of Chief Financial Officer as required by Rule 13a-14(a) of the Securities Exchange Act of 1934~~

~~32.1#~~

~~Certification of Chief Executive Officer as required by Rule 13a-14(b) of the Securities Exchange Act of 1934~~

~~32.2#~~

~~Certification of Chief Financial Officer as required by Rule 13a-14(b) of the Securities Exchange Act of 1934~~

~~101.INS+~~

~~XBRL Instance Document~~

~~101.SCH+~~

~~XBRL Taxonomy Extension Schema Document~~

~~101.CAL+~~

~~XBRL Taxonomy Extension Calculation Linkbase Document~~

~~101.LAB+~~

~~XBRL Taxonomy Extension Labels Linkbase Document~~

~~101.PRE+~~

~~XBRL Taxonomy Extension Presentation Linkbase Document~~

* Filed Herewith

+ Pursuant to applicable securities laws and regulations, the Company is deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and is not subject to liability under any anti-fraud provisions of the federal securities laws as long as the Company has made a good faith attempt to comply with the submission requirements and promptly amends the interactive data files after becoming aware that the interactive data files fails to comply with the submission requirements. ~~Users of this data are advised that, pursuant to Rule 406T, these~~These interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act, are deemed not filed for purposes of section 18 of the Exchange Act and otherwise are not subject to ~~liability.~~liability under these sections.

Copies of above exhibits not contained herein are available to any stockholder upon written request to:

Investor Relations: NVIDIA Corporation, 2701 San Tomas Expressway, Santa Clara, CA 95050.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 27, 2011
	NVIDIA Corporation
By:	/s/ Karen Burns
	Karen Burns
	Interim Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)

EXHIBIT INDEX

Incorporated by Reference

Exhibit No.

Exhibit Description

Schedule/Form

File Number

Exhibit

Filing Date

3.1

Certificate of Amendment of Amended and Restated Certificate of Incorporation of NVIDIA Corporation

8-K

0-23985

3.1

05/24/2011

3.2

Amended and Restated Bylaws of NVIDIA Corporation

8-K

0-23985

3.2

05/24/2011

10.38

Transition and Consulting Agreement, dated March 15, 2011, between David L.White and NVIDIA Corporation

8-K

0-23985

10.1

03/15/2011

10.39+

Fiscal Year 2012 Variable Compensation Plan

8-K

0-23985

10.1

03/25/2011

10.40+

Offer Letter, dated March 16, 2011, between NVIDIA Corporation and Michael Byron

8-K

0-23985

10.2

03/25/2011

10.41+*

2007 Equity Incentive Plan - Non Statutory Stock Option (Annual Grant - Board Service)

31.1*

Certification of Chief Executive Officer as required by Rule 13a-14(a) of the Securities Exchange Act of 1934

31.2*

Certification of Chief Financial Officer as required by Rule 13a-14(a) of the Securities Exchange Act of 1934

32.1#*

Certification of Chief Executive Officer as required by Rule 13a-14(b) of the Securities Exchange Act of 1934

32.2#*

Certification of Chief Financial Officer as required by Rule 13a-14(b) of the Securities Exchange Act of 1934

101.INS*

XBRL Instance Document

101.SCH*±

XBRL Taxonomy Extension Schema Document

101.CAL*±

XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB*±

XBRL Taxonomy Extension Labels Linkbase Document

101.PRE*±

XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF*±

XBRL Taxonomy Extension Definition Linkbase Document

* Filed herewith.

+ Management contract or compensatory plan or arrangement.

± Pursuant to applicable securities laws and regulations, the Company is deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and is not subject to liability under any anti-fraud provisions of the federal securities laws as long as the Company has made a good faith attempt to comply with the submission requirements and promptly amends the interactive data files after becoming aware that the interactive data files fails to comply with the submission requirements. These interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act, are deemed not filed for purposes of section 18 of the Exchange Act and otherwise are not subject to liability under these sections.

Copies of above exhibits not contained herein are available to any stockholder upon written request to:

Investor Relations: NVIDIA Corporation, 2701 San Tomas Expressway, Santa Clara, CA 95050.

5952

Delaware	94-3177549
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o

	Options Outstanding			Weighted Average Exercise Price
Stock Options		(In thousands)			(Per share)
Balances, January 31, 2010		58,348		$	11.30
Granted		2,353		$	18.01
Exercised		(6,292	)	$	8.24
Cancelled		(167	)	$	12.01
Balances, May 2, 2010		54,242		$	11.94

	RSUs		Weighted Average Grant-Date Fair Value
Restricted Stock Units		(In thousands)		(Per share)
Balances, January 31, 2010		7,489	$	12.28
Granted		2,700	$	17.94
Vested		(1,553)	$	10.17
Cancelled		(116)	$	14.12
Balances, May 2, 2010		8,520	$	14.44

	Options Outstanding			Weighted Average Exercise Price
Stock Options	(In thousands)			(Per share)
Balances, January 30, 2011		44,001		$	12.88
Granted		2,882		$	17.88
Exercised		(6,926	)	$	10.01
Cancelled		(456	)	$	17.63
Balances, May 1, 2011		39,501		$	13.69

	May 2, 2010			January 31, 2010
ASSETS
Current assets:
Cash and cash equivalents	$	447,262		$	447,221
Marketable securities		1,317,634			1,281,006
Accounts receivable, net		529,663			374,963
Inventories		388,139			330,674
Prepaid expenses and other		35,530			38,214
Deferred income taxes		8,752			8,752
Total current assets		2,726,980			2,480,830
Property and equipment, net		548,916			571,858
Goodwill		369,844			369,844
Intangible assets, net		115,423			120,458
Deposits and other assets		41,867			42,928
Total assets	$	3,803,030		$	3,585,918

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	362,740		$	344,527
Accrued liabilities and other		402,553			439,851
Total current liabilities		765,293			784,378
Other long-term liabilities		152,994			111,950
Capital lease obligations, long term		24,098			24,450
Commitments and contingencies - see Note 12
Stockholders’ equity:
Preferred stock		—			—
Common stock		663			653
Additional paid-in capital		2,288,989			2,219,401
Treasury stock, at cost		(1,473,655	)		(1,463,268	)
Accumulated other comprehensive income		10,872			12,172
Retained earnings		2,033,776			1,896,182
Total stockholders' equity		2,860,645			2,665,140
Total liabilities and stockholders' equity	$	3,803,030		$	3,585,918


Cost of revenue	$	11,412
Research and development		90,456
Sales, general and administrative		38,373
Total	$	140,241

	RSUs Outstanding			Weighted Average Grant-Date Fair Value
Restricted Stock Units	(In thousands)			(Per share)
Balances, January 30, 2011		10,612		$	13.23
Granted		3,280		$	18.18
Vested		(1,299	)	$	12.50
Cancelled		(234	)	$	14.03
Balances, May 1, 2011		12,359		$	14.60

~~Balances, January 31, 2010~~		~~44,022~~ (In thousands)
~~Stock options:~~
~~Granted~~ Legal settlement	$	57,000
License to Intel		1,583,000
License from Intel		(~~2,353~~140,000	)
~~Cancelled~~ Total cash consideration		~~167~~
~~Restricted Stock Units:~~
~~Granted~~		~~(2,700~~$	)
~~Cancelled~~		~~116~~
~~Balances, May 2, 2010~~		~~39,252~~1,500,000

1.	Legal settlement: In connection with the License Agreement, both parties agreed to settle all outstanding legal disputes. The fair value allocated to the settlement of $57.0 million was recorded in the fourth quarter of fiscal year 2011, as a benefit to operating expense.
2.	License to Intel: We will recognize $1,583.0 million in total, or $66.0 million per quarter, as revenue over the term of the agreement of six years, the period over which Intel will have access to newly filed NVIDIA patents. Consideration received in advance of the performance period has been classified as deferred revenue. In the first quarter of fiscal year 2012, we recognized $22.0 million of revenue as our performance obligation under the agreement commencing on April 2011.
3.	License from Intel: We recognized $140.0 million as an intangible asset upon execution of the agreement in the fourth quarter of fiscal year 2011. Amortization expense of $5.0 million per quarter will be charged to cost of sales over the seven year estimated useful life of the technology beginning in April 2011. In the first quarter of fiscal year 2012, we recognized amortization expense of $1.7 million.

	Three Months Ended
	May 1, 2011		May 2, 2010
	(In thousands, except per share data)
Numerator:
Net income	$	135,219	$	137,594
Denominator:
Denominator for basic net income per share, weighted average shares		594,802		567,183
Effect of dilutive securities:
Equity awards outstanding		18,672		23,814
Denominator for diluted net income per share, weighted average shares		613,474		590,997

Net income per share:
Basic net income per share	$	0.23	$	0.24
Diluted net income per share	$	0.22	$	0.23

	May 2, 2010
	Amortized Cost		Unrealized Gain		Unrealized Loss			Estimated Fair Value
	(In thousands)
Debt securities of United States government agencies	$	453,711	$	2,229	$	(55	)	$	455,885
Corporate debt securities		497,606		3,182		(162	)		500,626
Mortgage backed securities issued by United States government-sponsored enterprises		155,743		4,881		-			160,624
Money market funds		31,850		-		-			31,850
Debt securities issued by United States Treasury		348,372		1,068		(16	)		349,424
Total	$	1,487,282	$	11,360	$	(233	)	$	1,498,409
Classified as:
Cash equivalents								$	180,775
Marketable securities									1,317,634
Total								$	1,498,409
	January 31, 2010
	Amortized Cost		Unrealized Gain		Unrealized Loss			Estimated Fair Value
	(In thousands)
Debt securities of United States government agencies	$	492,628	$	3,606	$	(29	)	$	496,205
Corporate debt securities		514,200		4,064		(44	)		518,220
Mortgage backed securities issued by United States government-sponsored enterprises		162,693		3,674		(13	)		166,353
Money market funds		94,339		-		-			94,340
Debt securities issued by United States Treasury		316,520		1,318		-			317,838
Asset-backed securities		17		-		-			17
Total	$	1,580,397	$	12,662	$	(86	)	$	1,592,973
Classified as:
Cash equivalents								$	311,967
Marketable securities									1,281,006
Total								$	1,592,973

	January 30, 2011
	Amortized Cost		Unrealized Gain		Unrealized Loss			Estimated Fair Value
	(In thousands)
Debt securities of United States government agencies	$	531,789	$	1,034	$	(226	)	$	532,597
Corporate debt securities		925,226		3,354		(208	)		928,372
Mortgage backed securities issued by United States government-sponsored enterprises		140,844		4,599		(21	)		145,422
Money market funds		132,586		-		-			132,586
Debt securities issued by United States Treasury		435,091		1,939		(18	)		437,012
Total	$	2,165,536	$	10,926	$	(473	)	$	2,175,989
Classified as:
Cash equivalents								$	350,787
Marketable securities									1,825,202
Total								$	2,175,989

			Fair Value Measurement at Reporting Date Using
				Quoted Prices in Active Markets for Identical Assets			Significant Other Observable Inputs	High Level of Judgment
	May 2, 2010			(Level 1)			(Level 2)	(Level 3)
		(In thousands)
Other debt securities issued by United States government agencies (1)	$	455,885	$		-	$	455,885	$	-
Corporate debt securities (2)		500,626			-		500,626		-
Debt securities issued by United States Treasury (3)		349,424			-		349,424		-
Money market funds (4)		31,850			18,891		-		12,959
Mortgage-backed securities issued by government-sponsored entities (5)		160,624			-		160,624		-
Total assets	$	1,498,409	$		18,891	$	1,466,559	$	12,959

	Fair value measurement at reporting date using
				Quoted Prices in Active Markets for Identical Assets			Significant Other Observable Inputs
	May 1, 2011			(Level 1)			(Level 2)
	(In thousands)
Debt securities issued by United States government agencies (1)		$	587,384		$	-	$	587,384
Debt securities issued by United States Treasury (2)			568,456			-		568,456
Corporate debt securities (3)			958,451			-		958,451
Mortgage-backed securities issued by government-sponsored entities (4)			155,599			-		155,599
Money market funds (5)			283,564			283,564		-
Total cash equivalents and marketable securities		$	2,553,454		$	283,564	$	2,269,890

	May 2, 2010										January 31, 2010
	Gross Carrying Amount			Accumulated Amortization				Net Carrying Amount			Gross Carrying Amount		Accumulated Amortization				Net Carrying Amount
	(In thousands)
Technology licenses		$	135,629		$	(51,806	)		$	83,823	$	135,112		$	(48,337	)		$	$86,775
Acquired intellectual property			75,339			(52,657	)			22,682		75,339			(49,838	)			25,501
Patents			20,848			(11,930	)			8,918		19,347			(11,165	)			8,182
Total intangible assets		$	231,816		$	(116,393	)		$	115,423	$	229,798		$	(109,340	)		$	$120,458

	May 1, 2011										January 30, 2011
	Gross Carrying Amount			Accumulated Amortization				Net Carrying Amount			Gross Carrying Amount			Accumulated Amortization				Net Carrying Amount
	(In thousands)
Technology licenses		$	321,350		$	(69,646	)		$	251,704		$	320,477		$	(62,791	)		$	257,686
Acquired intellectual property			76,264			(63,951	)			12,313			76,264			(61,175	)			15,089
Patents			31,278			(16,534	)			14,744			31,278			(15,308	)			15,970
Total intangible assets		$	428,892		$	(150,131	)		$	278,761		$	428,019		$	(139,274	)		$	288,745

Balance, beginning of period, January 31, 2010	$	12,959
Transfer into Level 3		-
Other than temporary impairment		-
Redemption of funds		-
Balance, end of period, May 2, 2010	$	12,959

	Fair Market Value		Straight-Line Amortization Period
	(In thousands)		(Years)
Property and equipment	$	2,433	1-2
Trademarks		11,310	5
Goodwill		85,418	-
Total	$	99,161

	May 2, 2010		January 31, 2010		May 1, 2011		January 30, 2011
Inventories:	(In thousands)				(In thousands)
Raw materials	$	111,082	$	76,935	$	125,346	$	67,880
Work in-process		64,607		67,502		44,900		72,698
Finished goods		212,450		186,237		210,718		204,947
Total inventories	$	388,139	$	330,674	$	380,964	$	345,525

	May 1, 2011		January 30, 2011
Prepaid Expenses and Other:	(In thousands)
Prepaid maintenance	$	13,942	$	12,165
Prepaid insurance		4,756		3,512
Prepaid taxes		2,287		1,364
Prepaid rent		3,392		3,599
Other		12,223		11,996
Total prepaid expenses and other	$	36,600	$	32,636

	GPU			PSB		CPB				All Other		Consolidated
	(In thousands)
Three Months Ended May 2, 2010:
Revenue	$	780,853		$	189,730	$	31,230		$	-		$	1,001,813
Depreciation and amortization expense	$	34,506		$	5,395	$	6,893		$	-		$	46,794
Operating income (loss)	$	115,344		$	73,865	$	(41,816	)	$	-		$	147,393
Three Months Ended April 26, 2009:
Revenue	$	547,384		$	106,148	$	10,699		$	-		$	664,231
Depreciation and amortization expense	$	36,171		$	7,178	$	7,309		$	-		$	50,658
Operating income (loss)	$	(68,599	)	$	21,104	$	(43,229	)	$	(140,241	)	$	(230,965)

	As of May 2, 2010			As of January 31, 2010			As of May 1, 2011			As of January 30, 2011
	(In millions)						(In millions)
Cash and cash equivalents		$	447.3		$	447.2		$	683.6		$	665.4
Marketable securities			1,317.6			1,281.0			2,042.9			1,825.2
Cash, cash equivalents, and marketable securities		$	1,764.9		$	1,728.2		$	2,726.5		$	2,490.6

	Three Months Ended
	May 2,				April 26,
	2010				2009
		(In millions)
Net cash provided by (used in) operating activities		$	(5.4	)		$	142.1
Net cash provided by (used in) investing activities		$	(57.3	)		$	(8.9	)
Net cash provided by (used in) financing activities		$	62.8			$	(38.6	)

	Three Months Ended
	May 1,				May 2,
	2011				2010
		(In millions)
Net cash provided by (used in) operating activities		$	172.2		$	(5.4	)
Net cash used in investing activities		$	(252.5	)	$	(57.3	)
Net cash provided by financing activities		$	98.6		$	62.8