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What Factors Make Nvidia Appeal to Investors?

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Dec. 4 2020, Updated 10:52 a.m. ET

Platform for growth in the gaming space

In 1Q16, Nvidia’s (NVDA) gaming revenue stood at $587 million—an increase of 25% on a YoY (year-over-year) basis. Maxwell GPU (graphics processing units) architecture and TITAN X GPU enabled this growth in gaming. According to the company, TITAN X is the world’s fastest GPU.

In its 1Q16 release, Nvidia outlined TITAN X’s capabilities—including its ability to drive 4K games and virtual reality titles. Also, it delivers twice the performance and double the power efficiency of its predecessor. TITAN X delivers 50% more graphics computing power over its predecessor—GTX 980. It supports DirectX 12 built into Microsoft (MSFT) Windows 10.

The above chart shows the specifications and a comparison of Nvidia’s various generation GPUs.

If you’re bullish about Nvidia, you could invest in the Market PowerShares QQQ Trust (QQQ) to gain exposure to Nvidia. QQQ invests about 0.22% of its holdings in Nvidia.

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4K measures the horizontal pixels—unlike HD (high definition) which is measured by the number of vertical pixels. HD’s current standard is 1080 pixels, while any TV described as 4K is expected to have a minimum resolution of 3840 x 2160. This means a 4K TV has a picture with about 8.3 million pixels or about four times compared to a standard HDTV. In late 2014, Sony (SNE) launched its first portable 4K camcorder.

Growth contribution towards overall revenue is increasing

As we saw earlier in this series, Nvidia identified gaming, enterprise, automotive, high-performance computing, and cloud as the key areas that are driving its growth. In 1Q16, these segments—namely gaming, enterprise computing, high-performance and cloud computing, and automotive infotainment—contributed more than 80% to the overall revenue in 1Q16—compared to 68% over a year ago.

Also, increased mobile demand in the Chinese (FXI) markets, combined with the strong demand for GPUs in the automobile infotainment space, is positive for the company’s growth and future.

2Q16 expectations

For 2Q16, Nvidia expects revenue of $1.01 billion within the range of $999 million–$1.03 billion.

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