NVIDIA Steps It Up a Notch

NVIDIA Corporation [NASDAQ:NVDA] share price is going bananas.

In the past 12 months, its share price has almost quadrupled. Since 9 May the share price has increased 22%, from US$102.94 to US$126.50 a share.

Why?

You may know about the competition that exists between NVIDIA and Intel Corporation [NASDAQ:INTC]. You see, Intel is the main producer of central processing units (CPUs). CPUs are basically the brain of the computer, the one that coordinates how all the parts work together.

NVIDIA, on the other hand, provides interactive 3D graphics to personal computers. 72% of its share market is in graphic processing units (GPUs), which are chip processors that allow a computer to take in loads of images at quick pace.

A GPU is basically an accelerator for a CPU. They are usually used for interactive video games. Yet, lately, they are also being used in artificial intelligence (AI), which requires the processing of large amounts of data.

If you want to quickly understand the difference between a CPU and a GPU, Mythbuster’s does a great job in explaining it in under two minutes. You can watch the video here.

You see, for some time, Intel almost had a monopoly of the computer and server market by making the most powerful CPUs. You may remember the ‘Intel Inside’ sticker on almost every computer.

The thing is, with the rise of AI, CPUs — and Intel — are struggling to keep up. While NVIDIA took advantage from the AI push and diversified its business from gaming to data centres, professional visualisation and the automotive space — yep, NVIDIA provides GPUs for Tesla — Intel concentrated on making its CPUs more powerful. The problem is that CPUs are not keeping up fast enough with AI machine learning and applications.

Why? They need to process huge amounts of data.

And with AI tech in self-driving cars and deep learning on the rise, NVIDIA is gaining momentum.

Intel is still doing OK, but NVIDIA’s accelerator sales are growing.

And this week, NVIDIA stepped it up a notch.

On 9 May they reported their Q1 2018 earnings. Revenue is up 48% from a year ago, and there has been broad growth across all platforms. Their data centre GPU computing business nearly tripled from last year with more of the world’s computer scientists engaging in deep learning. Demand in cloud service providers has been growing with Amazon and Alibaba using NVIDIA GPUs for their cloud services.

But it is not just earnings. At the GPU Technology Conference in San Jose, California, the company released several exciting programs aimed at expanding its presence in the AI sector.

One of the developments is the Tesla Volta V100, a new GPU that increases a computer’s power.

It is also growing its interests in robotics with ‘Isaac’. Isaac is a simulator platform which helps developers train their robots virtually by creating test scenarios. As the system is completely virtual, there is no risk of robots creating damage or injury.

While NVIDIA’s stock is up, Intel’s fell over 2.5% following NVIDIA’s announcement.

If AI continues to develop at an accelerated speed, NVIDIA’s shares will continue to soar. Can Intel keep up?

Regards,

Selva Freigedo


Selva Freigedo is an analyst with a background in financial economics. Born and raised in Argentina, she has also lived in Brazil, the US and Spain. She has seen economic troubles firsthand, from economic booms to collapses and the ravaging effects of hyperinflation, high unemployment, deposit freezes and debt default. Selva now writes from her vantage point here in Australia. She is lead Editor at the daily e-letter Markets & Money. And every week, she goes through each report and research note produced by our global network of trusted advisors to find the best investment opportunities for you in Australia and overseas. She packages these opportunities for you in Global Investor.


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