What Are Nvidia’s Key Sources of Revenue?

by Trefis Team
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Nvidia’s (NASDAQ:NVDA) key sources of revenues are GPUs (graphics processing units), and Tegra Products. GPUs account for more than 80% of the company’s revenues, and more than 90% of the total EBITDA. The GPU segment is  benefiting from the gaming business. The company has been a pioneer in introducing new advancements and catering to the high-end GPU market. This trend will likely continue in the near term, and drive Nvidia’s earnings growth. We have created an interactive dashboard analysis that shows – What Are Nvidia’s Key Sources of Revenues? The interactive dashboard also shows the expected performance in 2018 and 2019. You can adjust the revenue drivers to see the impact on the overall revenues, EPS, and price estimate.

 

GPUs As Well As Tegra Products Will Likely Grow In Double Digits In The Near Term

Tegra Processors’ revenues have grown from less than $400 million in 2013 to over $1.5 billion in 2017. Much of this growth has come in over the last two years, with revenues growing 2.7x. The recent growth can be attributed to its SOC modules, which saw a whopping 300% jump in revenues (y-o-y). This can be attributed to the success of Nintendo Switch console, which uses Nvidia’s  SOC modules. Apart from SOC modules, the automotive division has been doing well of late, and growing in mid-teens. The company’s automotive platforms remain on a sharp upward trajectory with AI (artificial intelligence) to be introduced in several vehicle lineups. As such, we expect the revenue to grow 25% in 2018 as well as 2019, and in high teens in later years.

Looking at the GPU segment, the revenues have almost doubled over the past two years. This can primarily be attributed to Nvidia’s foray into data centers, expanding in both High Performance Computing (HPC) and the cloud. The data center revenues were up a solid 133% in 2017, led by continued growth in its CUDA platform, and increased acceptance of its Volta architecture. It should be noted that Nvidia is a leader in artificial intelligence and deep learning, and has developed a range of products for the same. These products are gaining popularity and aiding the revenue growth. We expect this trend to continue going forward, and estimate the GPU revenues to grow 25% in 2018 and in high single digits in the later years.

 

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