Research archive for NVDA

Byron just covered Nvidia's current results, but I'd like to look at their history since we started buying them for a few brave clients in 2015. Their main business at that time was souped up graphics processors (GPUs) in expensive desktop computer gaming rigs. It became clear later that GPUs were very good at processing large amounts of data and three growing industries became reliant on Nvidia's chips; self-driving cars, data centres and emerging machine learning applications.

The whole market was holding its breath for Nvidia's results out on Wednesday night. Artificial Intelligence (AI) has been a key driver of the recent market rally and Nvidia is the sector's "poster child". I am happy to report that the numbers smashed every expectation by a country mile.

Nvidia has a brilliant strategy to ensure that its chips are in high demand for years to come. The chip maker is investing in early-stage companies which operate in industries that will require large amounts of GPUs for growth. Having Nvidia as a shareholder increases the odds that these companies will continue to spend millions on new Nvidia GPUs.

Nvidia is the hottest company on Wall Street right now. Its shares are up over 198% year-to-date, a rally that gives the company a market capitalisation over $1 trillion. This is a title only four other American companies currently claim.

We added Nvidia to our Vestact-recommended stock portfolio in New York in March 2017. We rated their technological prowess, their management team under CEO Jensen Huang, and their dominant position in chips for gaming and graphics computers.

Nvidia is up 113% this year (only 5 months), an impressive return for a large company. The stock is part of our 'future hero' holdings, and has been very volatile over the last four years. First it flew due to Bitcoin, and then crashed. Then it flew with the metaverse, and then crashed. Now it is flying due to AI. Out of the three, AI seems the most sustainable.

Last week, the Nvidia share price wobbled on news that Google developed an AI supercomputer with better performance than Nvidia's competing systems. At the moment, Nvidia is the only game in town when it comes to running AI programs. It currently controls about 90% of the market.

Nvidia and Adobe have announced an AI partnership which will seek to further advance creative workflows in products like Adobe Photoshop, Adobe Premier Pro and Adobe After Effect. After Microsoft announced their enhanced office products, it only makes sense for other digital work programs to follow suit.

Vestact-recommended Nvidia issue their numbers towards the end of earnings season. The semiconductor chip giant reported revenue that beat analysts' expectations but provided a muted outlook. Total sales came in at $5.93 billion thanks to very impressive revenue from the datacentre business unit (up 31%), but the legacy gaming chip business fell 51% year-on-year, hampered by a 19.5% drop in PC shipments in the quarter.

There are never any winners in a war, whether it's military combat or a trade dispute. Trade relations between China and the US have been deteriorating since Trump initiated a trade war and Biden carried it on. Recently, China's increased focus on Taiwan has led to an escalation in tensions.

On Tuesday Nvidia launched a new set of GPU chips which will be four times faster than their current range. Nvidia's new chip architecture is named after the 19th-century English mathematician Ada Lovelace, generally considered to be the world's first computer programmer.

There is a lot of debate about whether Meta will crack the metaverse. The gaming companies have a head start because gamers have embraced the virtual world already. Meta is going full steam ahead and has indicated that it will invest $10 billion a year to create virtual worlds for their social media users.

Last week the Nvidia share price took a big hit after the US government imposed new export restrictions on high-end computer chips to China. The Feds are worried that these supercomputers can be used for military advancements. Nvidia was expecting $400 million worth of sales to China in the next quarter.

Nvidia and AMD have become the two main players in the GPU market. According to the latest monthly hardware survey by Steam, the leading online store for video games, 76% of participants in the July questionnaire used a card with an Nvidia chip. Bye bye AMD!

On Wednesday night Nvidia released second-quarter results. We knew these numbers would be ugly because they warned us two weeks ago. I covered that special update here. Basically, the high demand for high-end chips from crypto miners and gamers has fallen faster than expected.