Nvidia Starts Fiscal’17 On A Strong Note: Continued Strength In Gaming, Professional Visualization, Data Center & Automotive

May 13th, 2016 by Trefis Team
-34.55%
Downside
142
Market
92.84
Trefis
NVDA: NVIDIA logo
NVDA
NVIDIA

Graphics processor manufacturer Nvidia (NASDAQ:NVDA)reported first quarter earnings on May 12th.  (Fiscal years end with January.) The results marked a stellar start for fiscal 2017, with its Q1 2017 revenue and earnings per share (EPS) beating analyst estimates by a wide margin. The stock is up sharply as a result. The company’s Q2 2017 revenue guidance also came in slightly ahead of analyst expectation. Strong performance in the quarter can be attributed to continued growth in gaming (up 17% year over year), data center (up 63% year over year), automotive (up 47% year over year) and professional visualization (up 4% year over year), which more than offset the 21% year-over-year decline in OEM and IP business (mostly owing to the PC decline). The strong revenue growth, improving product mix, and lower restructuring charges helped the company report higher margins (both gross and operating).

NVDA_Q&A_!Nvidia has been focusing on 4 key platforms to drive growth — Gaming, Professional Visualization, Data Center and Automotive. The four segments together increased 21% yearover year in Q1 2015, and accounted for 87% of the company’s total revenue, up from 81% a year ago. In March 2016, Nvidia introduced its newest GPU architecture, Pascal. Built on the 16 nm technology, the platform promises to offer massive performance and power efficiency improvement over its predecessor. The company believes that Pascal will enable it to further extend its leadership across the four platforms mentioned above.

Gaming Will Continue To Be A Growth Driver For Nvidia, But Increasing Competition From AMD Cannot Be Ignored

Relevant Articles
  1. Could Nvidia Stock Crash 50%?
  2. Trump Helps AI Stocks Like Nvidia. Here’s How
  3. Nvidia Stock: High Risk, Higher Return?
  4. Why Did Nvidia Stock Fall 5%?
  5. Can Fed Rate Cut Take Nvidia Stock To $200?
  6. Here’s A Better AI Pick Than Nvidia

– Nvidia’s gaming platform has been growing at a >25% rate for the last two years.

– The holiday season momentum continued in Q1 2017, helped by the continued strength in Maxwell-based GTX processors.

– Recently, Nvidia launched its new high-end Pascal desktop GPUs, which represent a quantum lead for gaming and immersive VR experiences and promises to outperform the Maxwell architecture. (Read Press Release)

– Nvidia also extended its VR platform by adding special kits to its VR work software development kit and introduced simultaneous multi-projection.

– The gaming ecosystem and the gaming industry is approximately $100 billion large, so Nvidia believes there is ample scope for growth.

– However, AMD claims to be taking share in the PC gaming market as well as will be launching its 14nm FinFET based Polaris GPUs mid year.

We remain cautious about the increasing competition from AMD and believe that Nvidia could marginally lose its market share over the next few years.

Increasing Adoption Of Deep Learning Across Multiple Industries To Drive Data Center Growth

– GPU-accelerated datacenters are expanding in both High Performance Computing (HPC) and the cloud, driven by the growth of deep learning and Big Data.

– GPU’s have become the accelerator of choice for hyper scale data centers due to their superior programmability, competitive performance and power efficiency.

– The launch of VR can lead to potential growth in the enterprise segment, across multiple industries.

– Nvidia powers IBM lesson and Facebook’s big source server form Artificial Intelligence (AI). It is present in AI platforms at hyperscale giants such as Microsoft, Amazon, Alibaba, and Baidu for both training and real time influence.

– Nvidia is engaged with nearly 3,500 companies and organization in the development of the deep learning technology.

Nvidia Is At The Forefront Of Autonomous Car Solutions

– Nvidia claims that the worldwide interest for the DRIVE PX-2, a lunch-box size super-computer for self-driving cars, is continuing to grow among car makers, Tier 1 suppliers and others.

– It is currently in collaboration with 80+ companies using the open architecture of DRIVE PX to develop their own software and driving experiences.

– At the Global Technology Conference this year, the company demonstrated the worlds first self-driving car trend using deep learning.

– Nvidia claims that it can start shipping autonomous vehicles by the end this year.

– Nvidia currently derives majority of its Tegra revenue from the automotive segment. In addition to working with various companies on developing autonomous vehicles, Nvidia sells Advanced Driver Assistance Systems (ADAS) devices for cars. A few months back, the company announced that it has 20-25 million ADAS devices to ship in the pipeline.

Have more questions about Nvidia (NASDAQ:NVDA)? See the links below:

>> By What Percentage Did Nvidia’s Revenue And EBITDA Grow In The Last 5 Years?

>> How Is Nvidia’s Revenue & EBITDA Composition Expected To Change By 2020?

>> What Contributed To Nvidia’s Topline Growth: Calendar Year 2015

>> Why We Expect Nvidia’s Topline Growth To Slow Down In 2016?

>> Why The Automotive Market Is Important For Nvidia?

>> What’s Nvidia’s Fundamental Value Based On Expected 2016 Results?

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Nvidia

View Interactive Institutional Research (Powered by Trefis):

Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap More Trefis Research