A Snapshot Of Nvidia’s Business

by Trefis Team
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Nvidia’s (NASDAQ:NVDA) growth, and that of its stock price, has accelerated in the last couple of years. Much of this can be attributed to the expectation that Nvidia will disrupt the data center market, which has been Intel’s stronghold historically. Nvidia has the potential to become a key supplier in the $30 billion artificial intelligence semiconductor market. To give investors a quick overview of Nvidia’s business, we have created an interactive dashboard using Trefis’ technology that shows how Nvidia has performed in recent years, and how is it likely to grow in the next 2 years.

Nvidia’s Revenue & EBITDA Composition

Nvidia earns nearly 84% of its revenue and well over 90% of its EBITDA from its GPU segment, which primarily includes GPUs for desktops and notebooks. GPUs are used for superior graphics performance and offload the burden of graphics processing from the CPU. A graphics solution can be in the form of either a stand-alone graphics chip or an integrated chipset solution.

The remaining 16% of revenue can be attributed to Nvidia’s ‘Tegra Products’. Nvidia’s Tegra brand integrates an entire computer onto a single chip, incorporating GPUs and multi-core CPUs with audio, video and input/output capabilities. The Tegra processors are primarily designed to enable Nvidia’s DRIVE and SHIELD platforms.

Nvidia’s Past Revenue & EBITDA Growth

Between 2012 and 2017, Nvidia’s revenue increased from $4.3 billion to $9.5 billion (estimated), growing at a CAGR of just almost 17%. Its EBITDA grew at even higher rate as margins improved. Most of this growth has come in the last two years and can be attributed to the surge in Nvidia’s GPU revenue resulting from its expansion into data centers, as well as demand for high-end GPUs driving pricing increases. You can see segment-wise details of its revenue and EBITDA growth on our dashboard.

Nvidia’s Future Revenue & EBITDA Growth

We expect Nvidia’s annual revenue to increase from $9.5 billion in 2017 (expected) to $12 billion in 2019, implying a CAGR of more than 12%. During the same timeframe, we expect the company’s EBITDA to grow at a CAGR of 18%. We believe that the key factors that drove Nvidia’s growth in the last two years, including the demand for high end GPUs and Nvidia’s expansion in data centers, are likely to continue to be the growth drivers in the near term. Nvidia is poised to take advantage of growth in machine learning and cloud computing, as its GPUs have an advantage over CPUs in parallel computation. To see segment-wise details of revenue and EBITDA growth, see our dashboard here.

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