NVIDIA (NASDAQ: NVDA) Start the year with a bang In the first quarter of fiscal year 2021 (three months ended May 2, 2021), revenue increased 84% year over year to $ 5.66 billion and adjusted earnings per share increased 106% ahead of the quarterly update. Design Semiconductor has announced a 4-to-1 share, although the share does not have a significant impact on the valuation of the business. But investors are paying attention to the news. The stock is now up 175.8 percent since the start of 2020.
Separately, there are reasons to believe that NVIDIA is not over yet, the demand for chips is very high right now, and the company is the leader in several high-growth technologies. Let̵7;s take a look at three reasons this stock could keep moving in 2021.
1. A new gaming GPU upgrade has just begun.
NVIDIA started with high-end video game graphics, and the industry is still the company’s biggest market.Game sales were $ 2.76 billion in Q1, up 106% year over year. That trend is due to the RTX 30 series GPUs released late last year. These advanced chips come with ray tracing and AI-enhanced graphics capabilities to help players get the most out of their gaming experience.
With a huge increase in video game sales, it seems that the leading segment of NVIDIA is slowing down. That time has not yet arrived. The hardware upgrade cycle is really just the start.NVIDIA has just announced the first laptops with RTX GPUs coming out this summer, making the new chips available to tens of millions of gamers around. world And to better serve the needs of the video game market, NVIDIA has made restrictions on the RTX 30 series to prevent these graphics processors from using mining kits. cryptocurrency (a new CMP chip designed for the crypto market has been released and is expected to be worth $ 400 million in sales next quarter).
NVIDIA said it expected revenue of around $ 6.3 billion in the second quarter, up 63 percent from a year ago at the midpoint, while its cryptocurrency chips. Contributing to this rapid growth, the gaming market and data center represent the lion’s share of expanding.
2. Complex data centers need new technological hardware.
When it comes to data centers, this has quickly become NVIDIA’s second-largest vertical, with sales of $ 2.05 billion in Q1, up more than 79% year over year.
Data centers run in the background But it is a processor that is extremely important in today’s world. They operate the Internet, mobile networks, many software services built and in it, and coordinate real-world activities such as managing postal services and healthcare information. And in an increasingly complex digital world, better hardware is needed that can synchronize all of this new information.Many companies are adding GPUs to their data center designs as processing accelerators or replacing CPU models. old (Central Processing Unit) by using a faster and more energy efficient GPU. This is an area that is traditionally dominated. Intel (NASDAQ: INTC)But NVIDIA is bombarding the chip giant Haymaker. Last year it introduced a new data processing unit (DPU) and in early 2021 it announced a CPU called Grace that was designed to be GPU-matched and built on the basis for modern data center applications such as AI.
The data center is in the early stages of upgrading, as well as gaming business, CFO Colette Kress said in a earnings call. “Every industry is becoming a tech industry.” There’s no growth opportunity for NVIDIA, especially in cloud and AI-based services, as companies unlock new capabilities and increase operational efficiency using new chip technologies.
3.NVIDIA is not just a hardware company anymore
NVIDIA makes revenue from semiconductor sales. License revenue from chip design sales will be largely backed by the pending acquisition of ARM Holdings (which Kress said is still operational by early 2022), but its business model. NVIDIA today has more.
Recurring cloud-based software as a service (SaaS) revenue is a promising frontline for this chip company.The auto industry platform is a prime example. Car revenue was flat year-over-year in Q1 of $ 154 million as NVIDIA continues to phase out automotive infotainment hardware. But Drive’s autonomous vehicle platform covers more than just hardware. It also covers software services that help automakers and autonomous vehicle researchers develop self-driving potential and safety.
Another example is Omniverse, a new collaboration software platform for all kinds of designers and creators.Omniverse is in open beta. But there will be a commercial launch this summer for both individual and corporate users.Kress said that so far there have been more than 17,000 open beta downloads, indicating strong demand for this SaaS-based line of businesses. In short
Selling the software will be a long-term development for NVIDIA, but it’s still an exciting new avenue for the tech giant, well paired with its leadership in GPUs. Innovation is going on with all the cylinders at NVIDIA right now, and stocks could continue to rise in the second half of 2021 as growth continues at a rapid pace.
This article represents the opinion of the author, who may not agree with the recommended position. “Official” of Motley Fool’s Premium Advisory Service. We are motley! Questioning even one of our own investing thesis – helps us all think critically about investments and the decisions that help us make us smarter, happier and wealthier.