Research archive for NVDA

Nvidia is up 113% this year (only 5 months), an impressive return for a large company. The stock is part of our 'future hero' holdings, and has been very volatile over the last four years. First it flew due to Bitcoin, and then crashed. Then it flew with the metaverse, and then crashed. Now it is flying due to AI. Out of the three, AI seems the most sustainable.

Last week, the Nvidia share price wobbled on news that Google developed an AI supercomputer with better performance than Nvidia's competing systems. At the moment, Nvidia is the only game in town when it comes to running AI programs. It currently controls about 90% of the market.

Nvidia and Adobe have announced an AI partnership which will seek to further advance creative workflows in products like Adobe Photoshop, Adobe Premier Pro and Adobe After Effect. After Microsoft announced their enhanced office products, it only makes sense for other digital work programs to follow suit.

Vestact-recommended Nvidia issue their numbers towards the end of earnings season. The semiconductor chip giant reported revenue that beat analysts' expectations but provided a muted outlook. Total sales came in at $5.93 billion thanks to very impressive revenue from the datacentre business unit (up 31%), but the legacy gaming chip business fell 51% year-on-year, hampered by a 19.5% drop in PC shipments in the quarter.

There are never any winners in a war, whether it's military combat or a trade dispute. Trade relations between China and the US have been deteriorating since Trump initiated a trade war and Biden carried it on. Recently, China's increased focus on Taiwan has led to an escalation in tensions.

On Tuesday Nvidia launched a new set of GPU chips which will be four times faster than their current range. Nvidia's new chip architecture is named after the 19th-century English mathematician Ada Lovelace, generally considered to be the world's first computer programmer.

There is a lot of debate about whether Meta will crack the metaverse. The gaming companies have a head start because gamers have embraced the virtual world already. Meta is going full steam ahead and has indicated that it will invest $10 billion a year to create virtual worlds for their social media users.

Last week the Nvidia share price took a big hit after the US government imposed new export restrictions on high-end computer chips to China. The Feds are worried that these supercomputers can be used for military advancements. Nvidia was expecting $400 million worth of sales to China in the next quarter.

On Wednesday night Nvidia released second-quarter results. We knew these numbers would be ugly because they warned us two weeks ago. I covered that special update here. Basically, the high demand for high-end chips from crypto miners and gamers has fallen faster than expected.

Nvidia and AMD have become the two main players in the GPU market. According to the latest monthly hardware survey by Steam, the leading online store for video games, 76% of participants in the July questionnaire used a card with an Nvidia chip. Bye bye AMD!

The semiconductor industry is naturally cyclical. It has been that way since computing and chips became mainstream items. They are complex to manufacture with long lead times in developing fabrication plants, so managing the inventory can be tough. We have 522 clients that own Nvidia, the leading semiconductor chip maker on the planet. We need to understand these cycles in order to manage expectations.

The technological advancements we enjoy today are the fruits of the hard work done by generations before us. As Sir Isaac Newton said, "If I have seen further it is by standing on the shoulders of giants." The great thing about technological progress is that it's exponential.

High-end chipmaker Nvidia had very good quarterly numbers out last week, with revenue up 46% since last year and profits up by 55% to a record high.

Here's a fun article in the Wall Street Journal about Nvidia, written by Dan Gallagher. The headline is Nvidia's Trillion Dollar Dreams.

I'm continuing my theme from yesterday about companies struggling to balance production capacity with the demand for their product. In good times they ramp up capacity as quickly as possible, incurring significant costs, but when demand drops, they are stuck with too many expensive employees and equipment.