Demand for high-end computing paves way for Nvidia’s growth



GRID continues to gain traction

In our review of Nvidia’s 3Q15 earnings, we discussed the Nvidia (NVDA) GRID, a cloud-based gaming platform. This graphics virtualization platform continued to gain traction as more than 300 companies opted for worldwide testing of the product. In fiscal 2015, approximately 1,000 enterprises have evaluated GRID though the online demonstration, up from 400 enterprises in fiscal 2014.

Along with VMware (VMW), Nvidia launched a program for early customer access to GRID virtualized GPUs (or graphics processing units) in August 2014. The program is drawing wide global interest. Here are some of the program’s first customers:

  • Airbus
  • MetroHealth
  • Villanova University
  • Halliburton (HAL)
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In early February 2015, VMware unveiled the latest version of its vSphere virtualization software that includes full support for Nvidia’s GRID vGPU graphics virtualization technology.

Consider investing in the VanEck Vectors Semiconductor ETF (SMH) and the PowerShares QQQ Trust (QQQ) to gain exposure to Nvidia. Nvidia makes up about 1.94% of SMH and roughly 0.22% of QQQ.

Growth in unstructured data benefits Nvidia’s Tesla

In its 4Q14 earnings release, Nvidia stated that it had started fiscal 2015 with a 64% share of the PC discrete graphics market and an 81% share of the workstation graphics units market. Also, pilot projects at 44% of all HPC (or high-performance computing) sites were using Tesla.

In 4Q15, Tesla revenue grew by more than 50%, thus giving Nvidia’s high-end computing platform a good push. HPC customers and cloud service providers continued to deploy large, GPU-enabled systems, thereby benefiting Tesla.

Nvidia introduced its new flagship Tesla offering—the Tesla K80 dual-GPU accelerator—in 4Q15. The company claims that the accelerator provides approximately twice the performance and double the memory bandwidth of its predecessor, the Tesla K40.

The US Department of Energy recently announced the inclusion of Tesla GPU accelerators in its next generation of supercomputers. The supercomputers would work in conjunction with Nvidia NVLink high-speed interconnect technology.


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