Nvidia Corporation is a technology company known for designing and manufacturing graphics processing units (GPUs),technologies for workstations, desktop computers, and mobile devices.
The GPU segment comprises of product brands, which aims specialized markets including GeForce for gamers; Quadro for designers; Tesla and DGX for AI data scientists and big data researchers; and GRID for cloud-based visual computing users. The Tegra Processor segment integrates an entire computer onto a single chip, and incorporates GPUs and multi-core CPUs to drive supercomputing for autonomous robots, drones, and cars, as well as for consoles and mobile gaming and entertainment devices.
The company is a major supplier of integrated circuits used for personal computer motherboard chipsets, graphics and other related multimedia softwares. It is also a computing platform company operating at the intersection of graphics, HPC, and AI.
NVIDIA pioneered accelerated computing to tackle challenges no one else can solve.
Nvidia’s founders believed that for computer graphics to advance, a dedicated GPU would be needed. Previously, computer games were entirely CPU-based. However, gaming technology was advancing, slowly moving to Windows from MS-DOS. Graphics, especially 3D graphics, were reliant on considerable floating-point math processing, and the math coprocessor in the CPU was simply not enough Since establishing itself as the premier graphics chip provider for gaming, Nvidia has expanded into high-performance computing (HPC) and artificial intelligence (AI). The same gaming processors are used but repurposed for those different computational tasks.
HISTORY OF NVIDIA
The company was founded in 1993 by Jen-Hsun “Jensen” Huang, Curtis Priem and Chris Malachowsky and is headquartered in Santa Clara, Calif.
When NVIDIA entered in the early 1990s the GPU market was a very crowded one. Competition included ATI Technologies, Matrox, Chips & Technology, S3 Graphics and 3Dfx. NVIDIA rose above its competition in 1999 with the release of the GeForce card. It featured more advanced 3D graphics and lighting techniques than other manufacturers. As the GPU market consolidated around Nvidia and ATI, which was acquired by AMD in 2006, Nvidia sought to expand the use of its GPU technology. In 2004, the company developed CUDA, a language similar to C++ used for programming GPUs
Rather than using 3D graphics libraries as gamers did, CUDA allowed programmers to directly program to the GPU. This allowed them to write massive parallel programs to execute high-performance floating-point processes, such as simulations, visualizations and other applications with large amounts of data that need to be processed in parallel.
After introducing CUDA in 2006, Nvidia made a concerted effort to have the programming language taught in universities. Courses in CUDA can be found in more than 200 universities worldwide. This has helped build a workforce of Nvidia programmers.
In 2008, Nvidia introduced the Tegra line of systems-on-a-chip (SoC) that combined an Arm CPU with a scaled-down Nvidia GPU. TEGRA was primarily sold to carmakers for in-dash systems. However, in 2017, Nintendo adopted the Tegra for its handheld Switch console.
For most of its history, Nvidia strategically acquired small companies. However, in 2019, the company bought networking specialist MELLANOX TECHNOLOGIES, which was rumored to be an acquisition target by Intel, for $7 billion. Mellanox specializes in data processing units (DPUs), which are chips used in SmartNICs. SmartNICs intelligently route data better than a standard networking chip or CPU. The idea is to take over the processing of networking data, while the CPU continues its main job of processing data. Because HPC and AI require the movement of massive data sets, Nvidia’s GPU processors benefit from intelligent data processing and routing.
In 2016, both Nvidia and AMD were faced with a challenge as crypto miners realized that GPUs were especially efficient at mining cryptocurrency, such as Bitcoin. Large systems were built, consuming the entire supply of GPU cards from both Nvidia and AMD. This led to a shortage of GPU cards, which only worsened when COVID-19 caused shortages and supply constraints.
In 2020, Nvidia attempted to acquire CPU designer Arm Holdings for $40 billion. The deal ran into immediate opposition in Arm’s native United Kingdom, with allegations that Nvidia would play favorites with Arm licensing. Despite vehement denials, Nvidia was not able to overcome the opposition and dropped the deal after 18 months of effort.
NVIDA PRODUCTS
While Nvidia sells GPUs to consumers under the GeForce brand name, the company names each new generation of its enterprise architecture products after a famous scientist, such as Maxwell, Turing and Tesla. As of this writing, the current generation is Ampere, while the next generation to come to market is Hopper. Other popular Nvidia products include the following:
1. BlueField. The company’s suite of DPUs designed to intelligently manage network traffic and relieve the CPU. This technology was inherited from the company’s acquisition of Mellanox Technologies.
2. Spectrum. Nvidia’s next-generation Ethernet platform provides high-performance networking and effective security for the data center. It consists of ConnectX-7 SmartNIC, BlueField-3 DPU and the DOCA data center infrastructure software.
3. Nvidia Quadro/RTX. The company’s GeForce modified for professional visual computing graphics processing products, such as CAD (computer-aided design). The brand has been retired and replaced with the RTX line.
4. Tegra, The company’s SoC series for mobile devices.
5. DGX servers, Nvidia’s own line of hardware with GPUs, memory and SSD storage, but without a CPU. They are targeted at HPC and AI uses.
6. GeForce, Nvidia’s line of consumer-oriented graphics processors for desktops and laptops.
7. Jetson, Nvidia’s ultra-small form factor designed for embedded systems, combining a Nvidia GPU with an Arm processor.
NVIDA’S STOCK
These are the stock-based compensation expense, corporate infrastructure and support costs, acquisition-related costs, legal settlement costs, and other non-recurring charges.
Nvidia Stock shows a cup base with a 502.66 buy point. It slid more than 5% Oct. 17 following the AI chip curbs. The chipmaker, and stocks at large, have had a rocky few days after an early October rally.
Investors could use the Oct. 12 high of 476.09 as an early entry. For now, NVDA stock remains well below both the official buy point and the alternate, aggressive entry.
Shares of the chipmaker hit a record high in late August on AI-fueled growth, then pulled back. After a painful 2022, the company’s stock has soared about 199% year to date. It mostly held up better than growth stocks at large during recent market selloffs. The company joined IBD Leaderboard after gapping up on earnings in February. It surged again in May on AI-fueled earnings and outlook.
The relative strength line has pulled back a bit from two-decade highs, the IBD MarketSmith charts show. A rising RS line means that a stock is outperforming the S&P 500. It is the blue line in the chart shown.
NVDA earns a best-possible IBD Composite Rating of 99. In other words, Nvidia stock is in the top 1% of all stocks in terms of technical and fundamental metrics. Investors generally should focus on stocks with Comp Ratings of 90 or even 95 and above. Nvidia stock often earns a spot on the IBD 50, Big Cap 20 and Sector Leaders lists.
The IBD Stock Checkup tool shows that NVDA carries a Relative Strength Rating of 99. That means it has outperformed 99% of all other stocks over the past years.
NVIDIA EARNINGS
Nvidia’s EPS Rating is 93 out of 99 and its SMR Rating is an A, on a scale of A to a worst E. The EPS rating compares a company’s earnings growth to other stocks. Its SMR Rating gauges sales growth, profit margins and return on equity.
On Aug. 23, the chip giant issued another big beat-and-raise report, driven by its data-center business. Year over year, the company’s earnings rocketed 429% in Q2, while sales soared 101%. The Santa Clara, Calif.-based company’s data-center revenue surged 171%. The data-center business includes the A100 and H100 AI chips needed for AI applications.
For the current third quarter, Nvidia guided sales of $16 billion, up 170%, and well above estimates. “A new computing era has begun,” Chief Executive Jensen Huang said in a news release. “Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI.”
For the full year, analysts now expect Nvidia earnings to rebound 220% as sales jump 103%. Last year, Nvidia earnings fell 25% per share. Nvidia’s fiscal year ends in January.
Out of 51 analysts covering NVDA stock, 49 rate it a buy. Three have a hold and no one has a sell, according to FactSet.