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Nvidia Gets the Goods from Graphics Processing Unit Biz in 2Q16

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Dec. 4 2020, Updated 10:43 a.m. ET

Graphics processing unit segment continues its growth story in fiscal 2Q16

Previously in this series, we learned that at $1.153 billion, Nvidia’s (NVDA) revenues grew 5% on a YoY (year-over-year) basis in fiscal 2Q16. This growth was primarily driven by the GPU (graphics processing unit) segment, which accounted for ~83% of the company’s overall revenues. GPU revenues stood at $959 million, an increase of 2% quarter-over-quarter and 9% YoY.

In fiscal 2Q16, Nvidia’s gaming revenue grew by 59% YoY to $661 million. GTX 980 and GTX 980 Ti, which were recently released, coupled with high-end GTX GPUs, fueled this growth. After generating strong demand in PC gaming in fiscal 1Q16, Maxwell GeForce GPU architecture continued to build momentum in 2Q16.

The Titan X GPU is the company’s fastest GPU, with 50% more graphics computing power than its predecessor, the GTX 980. This GPU also propelled the growth seen in gaming. The Titan X GPU also supports DirectX 12 that’s built into Microsoft (MSFT) Windows 10.

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New launches that will propel its position in the 4K and gaming space

In fiscal 2Q16, Nvidia launched GeForce GTX 980 Ti GPU based on Maxwell architecture. It’s meant to target 4K and VR (virtual reality) gaming spaces. 4K measures horizontal pixels on a TV, quite unlike HD (high definition), which is determined by the number of vertical pixels. The HD current standard is 1,080 pixels. Any TV described as 4K is expected to have a minimum resolution of 3,840 x 2,160. This means a 4K TV offers a resolution of about 8.3 million pixels—that’s four times that offered by a standard HDTV. In late 2014, Sony (SNE) launched its first portable 4K camcorder.

Nvidia says that the customer base of the GeForce Experience PC gaming platform grew to 65 million, up from 38 million a year ago. This quarter, the firm also launched the Nvidia Shield Android (GOOG) TV device. Built on the Tegra X1 System on Chip and a 256-core Maxwell-based GPU, this is a smart TV platform that connects TVs to various apps and services. One notable thing about Nvidia’s Shield Android TV is that it’s the first device to be Netflix (NFLX)-certified for ultra-high definition 4K streaming.

If you’re bullish about Nvidia, you could invest in the VanEck Vectors Semiconductor ETF (SMH). SMH invests about 1.94% of its holdings in Nvidia.

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