Another Multi-Billion Dollar Opportunity for NVIDIA

NVIDIA (NVDA) is aggressively focusing on the deep learning market, as it is projected to grow over $100 billion in yearly revenue by 2024. The company stated that deep learning plays a very significant role in changing computing.

At present stage, NVIDIA’s GPUs are used by many companies to create their own machine learning computers. For instance, social media giant, Facebook (FB), uses the company’s Tesla M40 GPUs for its Big Sur machine learning computers.
This is a huge growth opportunity for NVIDIA and given its track record of being successful in several markets, I think the company will benefit from it.

Moreover, the company has already begun marketing some of its GPUs, such as Tesla P100, mainly to the enterprise market for corporate data centres. As a matter of fact, this is likely to surge because server and cloud-computing tasks are becoming complex day by day. In the case of severe data processing, NVIDIA’s DGX-1 deep learning supercomputer is the most efficient and reliable, as it is approximately five times faster compared to Intel’s Xeon Phi.

Apart from this, the company picked TSMC’s 16 nanometer FinFET Plus manufacturing technology to manufacture all of its Pascal architecture based graphics processors, which should include the company’s gaming business over the imminent numerous quarters.
Another Multi-Billion Dollar Opportunity for NVIDIA
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Furthermore, the company also knocked TSMC’s gate for its next generation Tegra SoC, a major component of its trivial but gradually escalating automotive chip business.

However, according to a South Korean newspaper, NVIDIA will tap Samsung to create graphics processors grounded on Pascal architecture before the end of this year. The company does not bring huge volume of chips, but it is still a significant user of TSMC’s superior manufacturing technologies.

TSMC’s technology is based on 16 nm, and NVIDIA is focusing on the 14 nm manufacturing process. At present, Samsung and Intel are only two firms that have 14 nm manufacturing process. This clearly suggests it is highly likely that the company’s two upcoming graphics processors could either be built entirely at Samsung or with the help of Samsung as well as TSMC.


The primary reason why I have always liked NVIDIA is because the company has a diversified revenue stream. The company is successfully gaining traction in several high growth markets and the aforementioned opportunity further boosts its growth prospects. Although the stock is trading at a high valuation, I think investors can still add NVIDIA to their portfolios.
Published on Aug 23, 2016
By Prudent Investor

Copyrighted 2016. Content published with author's permission.

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