Since 2014, Nvidia has shifted to become a platform company focused on four markets — Gaming, Professional Visualization, Data Centers and Auto.
In addition to GPU manufacturing, Nvidia provides parallel processing capabilities to researchers and scientists that allow them to efficiently run high-performance applications. They are deployed in supercomputing sites around the world. More recently, Nvidia has moved into the mobile computing market, where it produces Tegra mobile processors for smartphones and tablets, as well as vehicle navigation and entertainment systems.
Nvidia is now focused on artificial intelligence. From the company’s roots in computer graphics, Nvidia now provides GPU-accelerated computing to the gamers, designers and scientists, allowing them to create experiences in VR, deep learning, professional visualization and autonomous cars.
Nvidia has positioned itself in four of the most explosive areas of computing and has been able to embed itself in the leading technologies of the future. Based on it future potential alone this is a must own company for me, but it's also highly desirable to others and therefore its price has gotten rather high.
NVIDIA Corporation operates as a visual computing company worldwide. It operates in two segments, GPU and Tegra Processor. The GPU segment offers processors, which include GeForce for PC gaming; Quadro for design professionals working in computer-aided design, video editing, special effects, and other creative applications; Tesla for deep learning, accelerated computing, and general purpose computing; and GRID for cloud-based streaming on gaming devices. The Tegra Processor segment provides processors that integrate a computer onto a single chip under the Tegra brand name; DRIVE automotive computers, which offer supercomputing capabilities; and tablet and portable devices for mobile gaming under the SHIELD name. The company's products are used in gaming, professional visualization, datacenter, and automotive markets. It sells its products primarily to original equipment manufacturers, original design manufacturers, system builders, motherboard manufacturers, add-in board manufacturers, and retailers/distributors. The company has a collaboration with ZENRIN to develop a cloud-to-car HD map solution for self-driving cars. NVIDIA Corporation was founded in 1993 and is headquartered in Santa Clara, California.
(Summary) (Company) (Chart)
15 January 2016
1yr Target $99.00
Payout Ratio 29.31%
1yr Cap Gain -4.29%
1yr Tot Return -3.75%
EPS (ttm) $1.91
EPS next yr $2.70
Forward P/E 38.31
EPS next 5yr 28.58%
1yr Price Support $77.16
Market Cap $55.34 Bil
Revenues $6.14 Bil
Earnings $1.20 Bil
Profit Margin 19.54%
Quick Ratio 3.70
Current Ratio 4.10
1yr RevGR 7.00%
3yr RevGR 5.33%
5yr RevGR 7.17%
1yr EarnGR -4.58%
3yr EarnGR 6.20%
5yr EarnGR 20.22%
1yr DivGR 25.00%
3yr DivGR 41.01%
5yr DivGR ---
NVIDIA's mission is to to advance the area of information technology known as visual computing. They do this by enabling scientists, engineers and individuals to interact with digital ideas, data and entertainment with an ease and efficiency unmatched by any other communication medium.
The company's business model has three elements: creating NVIDIA branded products and services, offering processors to OEMs, and licensing the company's intellectual property. NVIDIA branded products and services are visual computing platforms that address four large markets: Gaming, Enterprise, High Performance Computing (HPC) & Cloud, and Automotive.
From the company's very beginning NVIDIA has been transforming computer information into visual representative computer graphics. The company's invention of the GPU introduced the world to the power of programmable graphics. The company's subsequent invention of CUDA has enabled the massively parallel processing capabilities of GPUs to be harnessed to accelerate general purpose computing. NVIDIA has invested more than $10 billion in research and development which has yielded more than 7,000 patent assets, including inventions essential to modern computing.
NVIDIA GPUs are chosen by gamers to enjoy immersive, beautiful fantasy worlds. They are used by professional designers to create visual effects in movies and design products ranging from soft drink bottles to commercial aircraft. And they are used by scientists and researchers to accelerate a wide range of important applications, from simulations of viruses to deep learning and global oil exploration.
GPUs, the engines of visual computing, are among the world's most complex processors. NVIDIA's GPU product brands aimed at specialized markets include GeForce for gamers; Quadro for designers; Tesla for researchers, deep learning and big-data analysts; and GRID for cloud-based visual computing users.
NVIDIA also integrates their GPUs into tiny mobile chips known as systems-on-a-chip (SOC) processors, which power tablets and automotive infotainment and safety systems. The Tegra brand integrates an entire computer onto a single chip, incorporating GPUs and multi-core CPUs with audio, video and input/output capabilities. They can also be integrated with baseband processors to add voice and data communication. The Tegra brand chips conserve power while delivering state-of-the-art graphics and multimedia processing.
Headquartered in Santa Clara, California, NVIDIA was incorporated in California in April 1993 and reincorporated in Delaware in April 1998.
The company's two reporting segments - GPU and Tegra Processor - are based on a single underlying graphics architecture. From these two proprietary processors Nvidia has created platforms that address four large markets where visual computing expertise is critically important: Gaming, Enterprise, HPC & Cloud, and Automotive.
· Quadro for design professionals working in computer-aided design, video editing, special effects and other creative applications
· Tesla for deep learning and accelerated computing, leveraging the parallel computing capabilities of GPUs for general purpose computing
· GRID to provide the power of NVIDIA graphics through the cloud and datacenters
· Tegra processors are primarily designed to enable the branded platforms - DRIVE and SHIELD. Tegra is also sold to OEMs for devices where graphics and overall performance is of great importance
· DRIVE automotive computers provide supercomputing capabilities to make driving safer and more enjoyable
· SHIELD is composed of a family of devices designed to harness the power of mobile-cloud to revolutionize gaming
By focusing on open platforms and end-to-end experiences, Nvidia brings high fidelity and quality to gaming devices. The company's GPUs enhance the gaming experience by improving the visual quality of graphics, increasing the frame rate for smoother gameplay and improving realism by replicating the behavior of light and physical objects. These can be enjoyed independently or together to extend the gaming experience across platforms.
The company's gaming platforms utilize sophisticated 3D software and algorithms - including GameWorks investment in real- time graphics and simulation. These enable the company to deliver realism and immersion, even when playing games remotely from the cloud. Nvidia further enhances gaming with GeForce Experience, an application for the gaming ecosystem that optimizes the PC user’s settings for each title and enables players to record and share their victories. It has been downloaded by more than 50 million users.
Nvidia's products for the gaming market include GeForce GTX GPUs for PC gaming, the SHIELD family of tablet and portable devices for mobile gaming, and GRID for cloud-based streaming on gaming devices.
Nvidia serves the Enterprise market by working closely with independent software vendors to optimize their offerings for NVIDIA GPUs. Nvidia's visual computing solutions enhance productivity for critical parts of the workflow of major industries like automotive, media and entertainment, oil and gas, and medical imaging - where GPUs improve productivity and introduce new capabilities.
Visual computing is vital to productivity in many environments, including the following:
- Design and Manufacturing - including computer-aided design, architectural design, consumer-products manufacturing, medical instrumentation and aerospace
- Digital Content Creation - including professional video editing and post production, special effects for films and broadcast-television graphics
- Enterprise Graphics Virtualization - including enterprises that virtualize their IT infrastructure using software from companies such as VMware, Inc. and Citrix Systems, Inc., which are significantly improved by NVIDIA GRID hardware and software
NVIDIA brands for this market are Quadro GPUs for workstations and GRID for virtualizing enterprise graphics. Quadro GPUs enhance the productivity of designers by improving performance and adding functionality, such as photorealistic rendering, high color fidelity and advanced scalable display capabilities. GRID makes it possible to run graphics-intensive applications remotely on a server in the datacenter, instead of locally on a PC or workstation. Applications include accelerating virtual desktop infrastructures and delivering graphics-intensive applications from the cloud.
HPC & Cloud
The NVIDIA Tesla accelerated computing platform applies the parallel-processing capability of GPUs and enabling software to general-purpose computing problems, greatly increasing performance and power efficiency over CPU-only solutions. Tesla-based servers and supercomputers increase the speed of applications used in such fields as aerospace, bio- science research, mechanical and fluid simulations, energy exploration, deep learning, computational finance and data analytics.
The fastest supercomputers in the U.S. and in Europe are powered by Tesla GPU accelerators. The U.S. Department of Energy recently announced that its next generation of supercomputers will be based on Tesla GPU accelerators.
Tesla has had a significant impact on scientific discovery, ranging from better understanding the HIV virus to enabling heart surgery on beating hearts. Consumer web and mobile companies like China’s Baidu use Tesla GPU accelerators to provide voice assistants, translation services and image analytics.
As technology gets increasingly important in the automotive market, the car is on its way to becoming each individual’s most powerful computer. Cars will feature a multitude of devices, driven by sophisticated software algorithms. These devices are designed to ensure our safety and the safety of those around us, enhance our comfort and enjoyment, and search and navigate. They will use the tools of deep learning to sense their environment, ultimately driving themselves. NVIDIA has the potential to own the entire stack of technology that makes this possible, including computing vision, deep learning and natural-language processing.
Beyond Automotive, we see the opportunity for Tegra in other embedded areas where visual computing is valued. Examples include robots that respond to voice and gesture commands, drones that process enormous amounts of visual based data and smart monitors powered by Android that make a PC optional.
My Path Forward
Since I already own shares of Nvidia, my path is already set. My strategy at this point is to continue to add shares to my position at beneficial prices. Unfortunately at the current price it's a little too pricey for my style of investing. Particularly the P/E ratio of 53. I think this is confirmed by the analysts who have projected a one year estimated price of just $99. I would love to buy shares of Nvidia at a price whose P/E would result in a number much closer to its projected 5 year estimated earnings growth rate. That would put the price closer to $80 per share but I really don't see that happening any time soon.
Against my better judgement I expect to continue to buy shares of Nvidia at prices below $100 per share. I believe so much in how the company's products are central to the future of technology that it will grow into its price. That may not be the smartest position to take on these shares but I intend to buy only a few shares at this price and then by more shares as the price pulls back closer to $80.
But this is buying on faith.