Nvidia Nails it Again
No one does it better than Nvidia (NVDA).
Fetch a measuring stick from the cupboard, gauge the levels of innovation around Silicon Valley, and Nvidia's name floats straight to the top of the list.
Nvidia has it all and more.
Not many firms can brandish one of the best CEOs in all of tech.
Nvidia CEO Jensen Huang is a true visionary.
When he hops on earnings calls, investors and analysts rejoice about the breadth of innovation percolating through the corridors in Santa Clara, CA.
Nvidia was able to increase quarterly revenue by an eye-popping 61% YOY. And this company is one of the quintessential growth companies in tech.
Huang is one of the few CEOs confident enough to talk all the way through the earnings call like he is talking about the back of his hand.
Most CEOs delegate to the CFO after a carefully choreographed introductory statement.
He knows everything about the company and is not afraid to go into detail.
The past few weeks have been hell for chip companies.
The cascade of downgrades undercut momentum with chip shares prices falling across the board.
Every nonsensical downgrade has proved unjustified with chip earnings displaying the robust potency that only FANGs can replicate.
Delve into Nvidia's latest performance and two parts of the business have gone into overdrive.
Gaming has burst to the forefront providing a sturdy pillar to Nvidia's income stream.
Fortunately, crypto mining and e-gamers are dual drivers fueling a rapidly expanding market.
In Q1, crypto miners and e-gamers faced a hysterical "scarcity" of high grade GPU hardware.
To make matters worse, Apple and Samsung are using the same memory as graphic cards.
These two global giants front ran other companies agreeing pricier per unit contracts to guarantee sufficient supply for their product lineup.
This led to a huge famine or feast environment to secure the necessary components.
Huang has ensured investors that Nvidia is moving mountains to meet demand and he hopes prices will "normalize" in the upcoming quarter.
Advanced Micro Devices (AMD) is the other player producing GPU chips that is experiencing a demand overload.
On the last sell-off, AMD dropped as low as 9.50 and was the perfect entry point into a great company led by Lisa Su, PhD.
AMD continued to bounce off the $9 handle and is trading at $13 after an outstanding earnings report.
Huang also caveated his hopes of chip prices normalizing by saying the "pent-up demand" could get worse because of the unbelievable gaming options in the market, such as blowout title Fortnite and popular online game Player Unknown's Battlegrounds that have sold more than 40 million copies throughout various platforms.
Nvidia has caught the innovation bug with new products coming off the conveyer belt sooner than expected.
Nvidia has announced NVIDIA RTX, the "holy grail" of graphic performance that will offer gamers Hollywood cinematic production quality lighting, reflections, and shadows.
This product has been in the works for the past 10 years and has gamers and miners drooling over this new technology called ray tracing.
Revenue from crypto miners is not a part of Nvidia's core mission, and the stronger than expected numbers are just the beginning.
If bitcoin takes another stab at $20,000, GPU demand will go through the roof.
As the price of cryptocurrencies rise, the profit-making opportunities to mine are greatly enhanced.
Another division running on all cylinders showing no sign of slowing down is the data center segment.
Initially, this industry was tabbed by Nvidia as a $30 billion opportunity by 2020.
They were completely wrong.
Nvidia moved the goal posts and announced at a recent investors day that it believes data center revenue will be a $50 billion market by 2023.
Data center revenue spiked 71% YOY to $701 million highlighting the innovation leadership Nvidia enjoys.
The data center incorporates Nvidia's Volta architecture and adoption has been broad-based.
Volta offers 500% more deep learning power than its previous edition Pascal.
The stamp of approval is evident with every major cloud player embracing the Volta technology.
At some points during the earnings call, it appeared to be a commercial for data center, gaming and crypto because of the strength of these two segments.
Huang did talk about other businesses such as autonomous driving buttering up its place in Nvidia's lineup.
Autonomous driving will be a $60 billion opportunity by 2035, according to conservative estimates.
Nvidia's DRIVE Constellation continues to be the bread-and-butter platform for automotive companies.
The platform allows car companies to use virtual reality (V.R.) to carry out driving trials.
Two servers have been built to aid in development.
The first server allows simulation in the form of a pseudo video game, and the other server is used to process the simulated data.
In whole, autonomous driving lagged gaming and data center with 4% growth YOY.
This should not alarm investors because Nvidia is in it for the long run.
The software system and infotainment in the first generation of commercial autonomous vehicles will have plenty of Nvidia chips hovering around under the hood.
At some point, every vehicle in the world will require autonomous technology. As Nvidia stays ahead of the innovation curve, buyers will gravitate toward its products.
The architecture of Nvidia chips allows car companies to advance their autonomous vehicle technology.
Nvidia is partnering with other industry leaders such as Tesla and Mercedes Benz, just to name a few.
Going forward developers will harness the power of artificial intelligence (A.I.) to build new software programs for the car.
The new car software will be part and parcel with voice recognition that has quickly come to the forefront of tech development.
Creating a whole autonomous vehicle system to just drag and drop into its business could lead to Nvidia's products becoming the industry standard.
Technical superiority eventually wins out.
Nvidia has diversified into every cutting-edge trend in technology.
Huang understands that to keep buyers salivating over its products, they must be the highest quality.
The reason Alphabet (GOOGL) or Apple partner and synergize with Nvidia so well is because it makes the best of the best and they cannot copy their products.
This is why ZTE, one of the biggest tech companies in China, practically went out of business after Donald Trump cut of its pipeline of critical American components.
Chinese companies have been attempting to buy American chip companies for years because the quality of chips is significantly superior.
Amid a backdrop of a trade war, Nvidia shares have been trading choppily from a strong support level of $200.
It is only a matter of time before Nvidia explodes through the $250 resistance level and climbs higher.
To watch a video demonstration on Nvidia's new RTX ray tracing technology click here.
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Quote of the Day
"The United States must possess unquestioned capacity to launch crippling counter-cyberattacks. This is the warfare of the future ... America's dominance in this arena must be unquestioned and today, it's totally questioned." - said President of the United States Donald J. Trump.
