Nvidia: Year 2017 In Review

2017 has been a solid year for many major semiconductor companies, and Nvidia (NASDAQ:NVDA) was no exception. In fact, the company’s stock performed significantly better than many of its competitors, growing by nearly 90% year-to-date and adding over $50 billion in value. The demand for Nvidia’s GPUs continues to grow, especially in the high performance computing market. Nvidia was an early mover in terms of addressing artificial intelligence and machine learning applications with its GPUs, and this has partly driven the investor demand for its stock. Below we take a brief look at important developments for Nvidia in 2017.

Our price estimate for Nvidia stands at $132, which is well below the market price following the stock’s rally.

Massive Growth In Data Center Revenue 

Nvidia’s revenue in the first 9 months of 2017 grew nearly 44%. In addition, the company’s revenue from data centers segment grew by well over 100%, reflecting strong demand from cloud customers for deep learning training and accelerated GPU computing, and demand for high performance computing, DGX AI supercomputing and GRID virtualization platforms. This helped drive Nvidia’s strong stock rally in 2017.

With the recent advancements in neural networks and machine learning, companies are increasingly automating tasks and using artificial intelligence to identify patterns and behavior. This data-intensive computation is being supported by the expansion of data centers by cloud service providers, and these data centers need microprocessors. Intel has generally dominated this market, but lately Nvidia has been making inroads. Its GPUs have an advantage over CPUs when it comes to parallel processing to speed up computations.

PC GPU Market Dominance Remained Despite AMD’s Efforts

AMD launched its new Radeon GPUs in 2017 targeted at the high-end gaming segment, but Nvidia has managed to maintain and even grow its market share, according to a report by Jon Peddie Research. A lot seems to be going Nvidia’s way right now; while it managed to strengthen its stronghold in its bread-and-butter PC GPU market, it also expanded rapidly in the data center market, which has massive potential going forward. However, it should be noted that Intel is getting serious about the GPU market, and the competition is likely to intensify going forward.

Intel recently hired an AMD executive to lead its newly formed Core and Visual Computing group, which will focus on developing high-end graphics solutions. This is something that Intel has not focused on traditionally, as it relied on its partnership with AMD to created integrated graphics units for its chipsets. Intel has recognized the growing number of GPU applications, especially in the artificial intelligence market, or more specifically, deep learning.

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