NVIDIA’s Rally Still Has Legs

Despite concerns about its valuation, NVIDIA (NVDA) has managed to breach its all-time high levels multiple times this year. The stock is up almost 150% since its February lows and it looks like its rally still has legs.

The company reported robust quarterly results yesterday, showing 27 percent year over year and 9 percent sequential top-line growth. On the other hand, the company’s operating expenses surged 6 percent whereas its operating income, net income and diluted earnings per share escalated 65 percent, 65 percent, and 56 percent on a year over year basis, respectively.

Considering NVIDIA’s robust results, it can be surely said that the company’s new “Pascal” architecture has started paying off, as its GPU business surged 25 percent as well as its Tegra Processor surged 30 percent throughout the year before period.

On the other hand, the company detailed that its GPUs are being installed in an escalating number of data centers for machine learning purposes, as they are designed to process certain science applications at a hastier rate compared to Intel’s industry-standard Xeon processors.

Furthermore, NVIDIA whirled its Tegra mobile chips in the direction of connected cars, which gave it strong traction in infotainment systems and onboard PCs for autonomous vehicles.

NVIDIA recently launched its new Pascal-based graphics cards that included the likes of GTX 1080.
However, the company is now on its way to launch its new monster graphics cards, Titan X. As per testing performed by TechPowerUp, the Titan X is approximately 31.5 percent hastier than the GeForce GTX 1080 in games at a stunning resolution of 3840 by 2160. Great thing comes at great prices, and same is the case with NVIDIA’s Titan X, as it will be available in the market for around $1,200.

Apart from this, NVIDIA’s chips are also being used to power infotainment and navigation systems. BMW, Tesla and Honda account for the major automakers and all of them uses NVIDIA’s chips for various purposes. The company is still growing rapidly in several high-growth sectors, which is why, after triple-digit returns; I am still bullish on the stock going forward.

Conclusion

NVIDIA’s recent results show that the company still has a lot of room to grow. Due to the company’s presence in several high growth markets, NVIDIA should continue moving higher in the long run. Thus, I think investors should ignore the valuation concerns and continue buying NVIDIA.
Published on Aug 15, 2016
By Prudent Investor

Copyrighted 2016. Content published with author's permission.

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