NVIDIA’s spending on gaming
NVIDIA (NVDA) and Advanced Micro Devices are investing in new products and technologies, driving their operating expenses. NVIDIA has expedited the rollout of its Turing GPU (graphics processing unit) architecture in order to boost the adoption of its ray tracing technology.
NVIDIA has launched its high-end GeForce RTX 2080 Ti GPU and midrange RTX 2060 GPUs. It’s also added a new lower range GTX 1660 Ti to its Turing GPU line-up and is teasing a new “Super” edition of Turing–based gaming GPUs.
All these product launches are driving NVIDIA’s operating expenses. The company is also spending on its GeForce NOW alliance, which will bring cloud gaming to broadband, cable, and mobile customers for a subscription fee and should generate recurring revenue and expand NVIDIA’s reach to more gamers who don’t have access to high-end gaming PCs.
NVIDIA’s spending in the data center space
NVIDIA is increasing its spending on software to create libraries and stacks on NVIDIA Cloud to make its GPUs easy to deploy for various AI applications. The company launched its Constellation platform in the first quarter of fiscal 2020. The platform will use two servers to train autonomous cars in a virtually simulated environment. Constellation’s revenue will be reported in the Data Center segment.
NVIDIA is also funding research in exploring new AI applications, which is increasing its expenses at present but should provide impressive returns in the coming few years when the applications hit the market.
NVIDIA has strong long-term growth potential once these ongoing investments start realizing revenue.