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Can Strong Demand for GPUs Aid NVIDIA's (NVDA) Q3 Earnings?
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NVIDIA (NVDA - Free Report) is consistently witnessing steady growth on the back of robust demand for graphic processor units (GPUs) and the momentum is likely to be reflected in the impending third-quarter fiscal 2019 results, scheduled to be announced on Nov 15.
The chip-making giant is well known for its high-performance GPUs used by PC gamers. However, for the last couple of years, NVIDIA’s strategy of applying its GPUs in the artificial intelligence (AI) models has helped it expand its presence in several fast-growing fields including self-driving cars and datacenter.
The growing trend of adopting AI techniques in the aforesaid industries is primarily responsible for driving GPU demand. NVIDIA’s constant focus on introducing an array of fast and innovative products is a key growth driver in this regard.
Click here to know how the company’s overall Q3 performance is likely to be.
Datacenter: A Perpetual Key Growth Catalyst
Datacenter presents a solid growth opportunity for the company. As more and more businesses are shifting to cloud computing, the need for datacenters is surging. The company now seems well poised to capitalize on this emerging trend.
NVIDIA’s GPUs are most preferred by datacenter operators, which should continue to boost its top and the bottom line. The company is a leading player in selling GPUs to data-center service providers boasting clients like Amazon (AMZN - Free Report) , Microsoft (MSFT - Free Report) and Alphabet (GOOGL - Free Report) .
Management has successfully marketed the company’s solutions to compete with industry leaders like Intel. Notably, the company’s revenues from this segment increased to $1.93 billion in fiscal 2018 from $317 million in fiscal 2015.
Strong adoption of AI, deep learning, high-performance computing (HPC) and a solid traction of the new Volta architecture are boosting revenues at the datacenter segment. Notably, with the AI gaining ground among other vertical industries like transportation, energy, manufacturing, smart cities and healthcare, is proving beneficial for NVIDIA.
Moreover, the company’s AI inference solution is helping it extend its total addressable market. During the last reported quarter, NVIDIA launched Tensor RT 4, which facilitates speech recognition, speech synthesis, translation and recommendation systems. With this, the company expects to “address a much larger portion of deep learning inference workloads, delivering up to 190x performance speed-up relative to CPUs.”
The company also recently announced that the new NVIDIA T4 GPU has recorded the quickest adoption of any server GPU.
Furthermore, the company’s fully optimized AI server, DGX, is a prime growth booster of its datacenter business.
The Zacks Consensus Estimate for datacenter revenues in the fiscal third quarter is pegged at $821 million, indicating year-over-year growth of 64%.
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Can Strong Demand for GPUs Aid NVIDIA's (NVDA) Q3 Earnings?
NVIDIA (NVDA - Free Report) is consistently witnessing steady growth on the back of robust demand for graphic processor units (GPUs) and the momentum is likely to be reflected in the impending third-quarter fiscal 2019 results, scheduled to be announced on Nov 15.
The chip-making giant is well known for its high-performance GPUs used by PC gamers. However, for the last couple of years, NVIDIA’s strategy of applying its GPUs in the artificial intelligence (AI) models has helped it expand its presence in several fast-growing fields including self-driving cars and datacenter.
The growing trend of adopting AI techniques in the aforesaid industries is primarily responsible for driving GPU demand. NVIDIA’s constant focus on introducing an array of fast and innovative products is a key growth driver in this regard.
Click here to know how the company’s overall Q3 performance is likely to be.
Datacenter: A Perpetual Key Growth Catalyst
Datacenter presents a solid growth opportunity for the company. As more and more businesses are shifting to cloud computing, the need for datacenters is surging. The company now seems well poised to capitalize on this emerging trend.
NVIDIA’s GPUs are most preferred by datacenter operators, which should continue to boost its top and the bottom line. The company is a leading player in selling GPUs to data-center service providers boasting clients like Amazon (AMZN - Free Report) , Microsoft (MSFT - Free Report) and Alphabet (GOOGL - Free Report) .
Management has successfully marketed the company’s solutions to compete with industry leaders like Intel. Notably, the company’s revenues from this segment increased to $1.93 billion in fiscal 2018 from $317 million in fiscal 2015.
Strong adoption of AI, deep learning, high-performance computing (HPC) and a solid traction of the new Volta architecture are boosting revenues at the datacenter segment. Notably, with the AI gaining ground among other vertical industries like transportation, energy, manufacturing, smart cities and healthcare, is proving beneficial for NVIDIA.
Moreover, the company’s AI inference solution is helping it extend its total addressable market. During the last reported quarter, NVIDIA launched Tensor RT 4, which facilitates speech recognition, speech synthesis, translation and recommendation systems. With this, the company expects to “address a much larger portion of deep learning inference workloads, delivering up to 190x performance speed-up relative to CPUs.”
The company also recently announced that the new NVIDIA T4 GPU has recorded the quickest adoption of any server GPU.
Furthermore, the company’s fully optimized AI server, DGX, is a prime growth booster of its datacenter business.
The Zacks Consensus Estimate for datacenter revenues in the fiscal third quarter is pegged at $821 million, indicating year-over-year growth of 64%.
NVIDIA Corporation Revenue (TTM)
NVIDIA Corporation Revenue (TTM) | NVIDIA Corporation Quote
NVIDIA currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
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