Here Are NVIDIA's Key Growth Catalysts
By: Market Realist | April 15, 2019 NVIDIA’s stock
NVIDIA’s (NVDA) stock was the apple of investors’ eyes in 2016 and 2017 as the advent of AI (artificial intelligence) brought its GPU (graphics processing unit) into the limelight. The big seven cloud companies adopted NVIDIA’s GPUs for machine learning. Although the company’s core end market is gaming, from where it earns more than 50% of its revenue, the stock rose on the data center opportunity and fell on gaming weakness. Factors influencing NVIDIA’s stock
Now let’s look at NVIDIA’s stock movement. In 2016, NVIDIA’s stock rose 225% as it introduced Pascal GPU architecture into the data center market for the first time. Even Advanced Micro Devices’ (AMD) stock rose 295% in 2016 on the launch of Polaris GPU.
NVIDIA’s stock rose as the GPU computing opportunity drove NVIDIA’s data center revenue by more than 100% YoY. The data center revenue also rose above 200% in the fourth quarter of 2016. This triple-digit growth lasted until the end of 2017, which drove NVIDIA’s stock up 81.8% in 2017.
NVIDIA’s data center revenue growth slowed to double digits in 2018, but NVIDIA’s stock continued to grow 50% between January and early October 2018 due to more than 50% growth in gaming revenue on the back of crypto-related demand.
NVIDIA’s 33-month-long growth spree came to an end as the crypto bubble burst pulled the stock down 54% in the fourth quarter of 2018. The stock fell as its data center growth rate slowed to just 12% and its gaming revenue fell 45% on a YoY basis in the fourth quarter of fiscal 2019, which ended January 27, 2019. What lies ahead for NVIDIA?
NVIDIA tried to revive investor confidence at its Investor Day and GTC 2019 (GPU Technology Conference), both held in mid-March. At these events, NVIDIA talked about the future of accelerated computing and the role NVIDIA plays in this opportunity. The company discussed its new growth avenues in ray tracing, data science, and robotics.
NVIDIA’s stock rose 13% within 20 days of the conference. The stock still has immense growth potential in the long term, and investors may want to use the current weak price to make an entry.
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