- NVDA STOCK RATING DRIVERS
- NVDA STOCK RATING UPDATE
- NVDA STOCK RATING DRIVER
- NVDA STOCK RATING UPGRADE
- NVDA STOCK RATING SOFTWARE
NVDA STOCK RATING SOFTWARE
Currently, only "10% of the world's top 100 companies" are users of NVDA's Omniverse enterprise software as highlighted at NVIDIA's Q1 FY 2023 earnings call on May 25, 2022. The company described Omniverse as "a simulation engine for physically accurate virtual worlds and digital twins" at its 2022 Investor Day.
NVDA STOCK RATING DRIVER
Furthermore, NVDA has already gained a strong foothold in the automotive market, with the company disclosing at its 2022 Investor Day that it "won designs in 20 of the top 30 EV car OEMs."įor the professional visualization market, the Omniverse enterprise software should be the major growth driver in the next decade. Notably, NVIDA's automotive revenue was less than 5% of the sales contributed by the gaming market in FY 2021, but the company estimates that the automotive TAM (Total Addressable Market) is three times that of the TAM for the gaming market. In other words, it will probably take close to 10 years for the inflection point for NVDA's automotive market revenue to arrive. With respect to the automotive market, 2030 is the year that technology research firm Omdia expects "vehicles with Level 3+ autonomous systems" will have "wider adoption in mature markets" according to its Septemresearch report. In 10 years' time, NVIDIA should have a more balanced revenue mix, with its automotive and professional visualization markets growing faster than its core data center and gaming markets. In comparison, the professional visualization, OEM & other, and automotive markets contributed 8%, 4% and 2% of the company's FY 2022 top line, respectively. NVDA derived 46% and 40% of its fiscal 2022 (YE January) revenue from its gaming and data center markets, respectively as per its 10-K filing.
NVDA STOCK RATING DRIVERS
NVDA can continue to grow in the future, but the key growth drivers for NVIDIA in the next decade will be very different from the factors responsible for NVDA's growth in the prior 10 years. NVIDIA is a good long-term investment based on a reasonable assumption that the company will continue to dominate the GPU market for the next 10 years as it did in the past. While history isn't a perfect indicator, it is probably the best indicator of the future. NVDA had the ability to stay as the market leader in GPUs for a very long time or more than a decade in the past. This is a clear indication that NVDA has a competitive edge as compared to its rivals. NVIDIA has been able to maintain and even extend its market leadership over Advanced Micro Devices ( AMD), as indicated by the red line in the chart and the Radeon brand, in the past 15-16 years in the GPU AIB segment.
GPU AIB Market Share For The Period Between Q4 2002 And Q1 2022ģD Center Website Which Collated Data From Mercury Research And Jon Peddie Research Nvidia's GPU AIB market share has grown to approximately 75% in the first quarter of this year. NVIDIA is a good investment for the long term, because of the company's market leadership.Īs per the chart below, NVDA's share of the GPU (Graphics Processing Units) AIB (Add-in Board) market (as represented by the GeForce graphic cards or the green line in the chart) has consistently remained above 50% since the third quarter of 2005. The good long-term outlook and reasonable valuations make NVDA stock a Buy in my view.
In terms of valuations, NVDA's forward P/E multiple has also more than halved from its peak. NVIDIA will be a more profitable company with a more balanced sales mix by market in 10 years' time based on my analysis. As such, I choose to focus on NVIDIA's long-term outlook (as opposed to its medium-term prospects), or more specifically where the company will be in the next decade, in my current article.
Given that no one knows how long the current bear market will last and that a recession seems to be the base case scenario for most investors, it is critical to extend one's investment time horizon.
NVDA STOCK RATING UPDATE
In my prior update for NVDA written on March 28, 2022, I touched on NVIDIA's growth prospects in the intermediate-term or the next five years, by making reference to metrics disclosed by NVDA at the March 2022 Investor Day and the sell-side's consensus financial projections for the company.
NVDA STOCK RATING UPGRADE
I upgrade my rating for NVIDIA Corporation's ( NASDAQ: NVDA) stock from a Hold to a Buy.
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