Will 2016 be Another Great Year for NVIDIA?

Graphic cards giant, NVIDIA (NVDA) launched various designs in 2015 and most of them were successful. In October, an enhanced version of its GT 940M integrated in Microsoft’s (MSFT) first laptop, the Surface Book. In December, Tegra X1 processor featured in Google’s (GOOG)(GOOGL)Android-powered Pixel C tablet, and various other high-end graphic cards including GTX 970M and GTX 980M.
All in all, the chipmaker had a great year and unsurprisingly, the stock outperformed the market.

Out of all the designs launched by the company in 2015, the Manifold accounts for the best and biggest design, announced by the drone king DJI in November. DJI offers NVIDIA has a noble opportunity to tactically prolong its reach into the drone sector, a hasty-escalating sector that could play an important role in the company’s long-term prospect.

NVIDIA’s Manifold is a computer designed to use with DJI’s Matrice 100. DJI’s Matrice 100 is one of the most popular products from its entire collection, and is available in the market for around $3,300. Matrice 100 comes under the category of most expensive drones present in the market. Apart from this, Manifold is not included in Matrice 100 price- $3,300, and is available for $500 in the market. The total cost of both the products is likely to be outside the budget of majority of drone purchasers.

DJI is well-cognisant of this problem and does not sell the Manifold or Matrice 100 to usual customers. DJI’s Matrice 100 is designed to use as tools for developers. DJI use NVIDIA’s Tegra K1 processor and believes in the latent of NVIDIA’s Tegra processor to introduce next-generation drones.

At present, NVIDIA’s Tegra processors produced less than 10 percent of its overall revenue. The company’s Tegra chips are used in variety of devices comprising Chromebooks, Pixel C. It is also used in several automobiles including Tesla’s Model X. But the drone market remains a newer phase for NVIDIA. Consensus expects that the demand for drones will surge in the coming years.

According to the several estimates, the total spending on drones will be more than double over the next decade. NVIDIA has already gained a stronghold in the gaming and automobile market, and the drone market can act as another potential tailwind for NVIDIA going forward. Given the success that the company has enjoyed, I wouldn’t bet against the company doing well in the drone market as well.


NVIDIA had a great year and I think the stock can extend its run in 2016 as well. The company has many growth drivers that can propel the stock to new-highs. Given the success that the company has enjoyed in several markets over the last few months, investors can expect it to continue diversifying and do well in other sectors as well.
Published on Jan 8, 2016
By Vinay Singh

Copyrighted 2020. Content published with author's permission.

Posted in ...