After Growing Almost 70% Over The Last 2 Years, Why Is Nvidia’s Revenue Expected To Grow Only 4% By 2021?

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Nvidia’s (NASDAQ: NVDA) total revenue has grown from $6.91 billion in 2017 to $11.72 billion in 2019, primarily driven by a growth of $4.09 billion in GPU revenue. However, we expect revenue to drop to $10.88 billion in 2020, amidst dropping PC and notebook sales and a slowdown in the Chinese economy.
Regardless, total revenue should rise to around $12.21 billion by 2021, driven by the company’s new Turing products, and a revival in data center demand.

Takeaway

  • Nvidia’s GPU segment, which sells graphic processors used in PCs and data centers, is expected to contribute $9.46 billion to total revenue in 2020, making up 87% of Nvidia’s total revenue estimate.
  • The Tegra Processors division is expected to bring in $1.42 billion in 2020, to make up 13% of the total revenue estimate.
  • The GPU division has been the sole driver of revenue growth, and is expected to add $4.51 billion between 2017 and 2021, which is 85% of the additional $5.3 billion that the company is expected to bring in over this period.
  • Nvidia’s total revenue has grown more than 70% between 2017 and 2019, but we expect a 7% YoY drop in revenue for 2020.
  • In our interactive dashboard Nvidia Revenue: How Does Nvidia Make Money?, we discuss Nvidia’s business model, followed by sections that review past performance and 2021 expectations for Nvidia’s revenue, including comparisons with close competitors, Intel and AMD.

A look at Nvidia’s segments and their contribution to total revenue

(A) GPU revenue to grow by $420 million over the next 2 years, to make up 87% of total revenue in 2021

  • GPU revenue has grown from $6.09 billion in 2017 to $10.18 billion in 2019, and has been the primary driver of Nvidia’s revenue growth.
  • However, we expect GPU revenue to drop to $9.46 billion in 2020, under pressure from low PC and notebook sales, and a slowdown in data center demand.
  • However, things should get better by 2021, and we expect revenue in 2021 to come in at $10.6 billion.

(B) Revenue from the Tegra Processors segment to grow by $80 million over the next 2 years, to make up 13% of the total revenue estimate

  • Revenue from this segment has grown from $0.82 billion in 2017 to $1.54 billion in 2019.
  • However, revenue from Tegra Processors could come under pressure in 2020, due to a slowdown in the Chinese economy (around 25% of Nvidia’s revenue comes from China).
  • However, by 2021 this metric could grow to $1.62 billion on the back of growing demand for gaming consoles.

 

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