NVIDIA ( > EMA 38 weekly)
Nvidia (Ticker: NVDA) is active in pure growth-sectors: And the growth in revenues is very likely to continue, as the company is involved in such attractive fields as gaming,...
...cryptocurrency, autonomous driving, and machine learning (Artificial Intelligence / AI).
A lot of bullish commentary around NVIDIA stock is especially due to the opportunities from AI, which is still in a nascent stage. While the AI business will continue to grow, gaming will remain the main driver for the next few quarters, given its contribution to NVIDIA's overall revenue. John Peddie Research expects the PC gaming market to grow at a CAGR of 6% from over the next three years, implying a market value of USD 36 billion in 2019. The strong growth in eSports and demand for VR gaming will also be a big positive for NVIDIA.
eSports is now as popular as sports streaming giant ESPN. In an interview with Venture Beat, NVIDIA CEO Jensen Huang remarked that "I happen to believe that video games will be the largest sport and entertainment in the world. There are hundreds of millions of gamers today. I believe there will be billions. It's a great opportunity. I believe the market for video games will continue to grow. I also believe the technology will evolve and advance."
Helped by gaming business, NVIDIA topped the Wall Street estimates for the last quarter once again. As already mentioned Gaming is NVIDIA's largest part of its portfolio. In the third quarter, the gaming segment revenue came in at USD 1.5 billion, contributing 57.5% of NVIDIA's total revenue. This segment has continued to show strong growth over the past few quarters.
On 18th September 2017, NVIDIA's stock peaked at USD 191 as Bank of America Merrill Lynch analyst Vivek Arya stated that the company's product leadership in the gaming, data center, and AI markets will likely drive its growth in the future.
Arya also expects NVIDIA's data center revenues, which have tripled over the past year to nearly USD 1.4 billion, to rise to USD 4 billion by fiscal 2020. He expects NVIDIA's capital spending on the cloud to rise 16.5% in fiscal 2018 and 21% in fiscal 2019.
Artificial Intelligence (AI)
Arya is most optimistic about AI opportunities and believes that NVIDIA's first-mover advantage will likely make it a dominant supplier in the USD 30-billion AI chip market. Arya stated that NVIDIA's GPUs are increasingly being used in the healthcare industry for predictive analytics, image scanning, and pathology assessments.
Since the start of the year 2017, NVIDIA's stock has been high flying, more than doubling so far in 2017. The company is not only benefiting from gamers who use its graphics chips for their high-end entertainment but from data center wins, artificial intelligence, self-driving vehicles and cryptocurrency mining. Analysts have been rewarding its growth and diversification strategy by lifting their price targets on the stock and issuing bullish note after bullish note.
Disclaimer/Disclosure: Ralph Gollner hereby discloses that he directly owns securities of Nvidia (NVDA), as per 20th November 2017.
Disclaimer/Hinweis nach §34 WPHG zur Begründung möglicher Interessenkonflikte: Aktien von Nvidia (NVDA) befinden sich aktuell im "Echt-Depot" von Mag. Ralph Gollner - per 20. November 2017.