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Why NVIDIA Looks Like a Good Bet

April 10, 2014 | About:
mitu77

mitu77

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NVIDIA (NVDA) is an established name in Graphic Processor Units (GPU). The company’s latest quarterly results were strong. This is a good sign for the company, as well as investors who had patiently waited for some extraordinary growth.

The company’s sales in the past were in the doldrums with the sun setting over the PC market, but this was offset by growth in high-end gaming GPU sales. Although the market for mobile gaming and next generation gaming consoles has been rising, NVIDIA was still focused of the declining PC market. This further created a dent in sales figures for a player like AMD (AMD), which was not as focused as NVIDIA in this market.

Now, with analysts reporting a rebound in the PC market, this should further help NVIDIA improve. In recent times, NVIDIA has been impressive with latest new products that have enabled it to make a U-turn in its business. New growth opportunities in the vehicle infotainment segment can be catalysts for NVIDIA’s growth. As per IHS, global sales of infotainment systems were $34.6 billion with Panasonic as market leader. The growing opportunity here could double by 2017 and companies like NVIDIA can take a bigger bite of the market share from Panasonic.

Aiming to Be the Leader in PC Games

As already stated, the rebound in the PC market is providing a tailwind to the company’s growth prospects. The gaming industry is worth around $100 billion annually. This market is spread across mobile devices, consoles and PCs. Last year, Xbox and PlayStation-4 were launched, which created a boom in console gaming revenue, but the PC market which is said to be declining in the past has a bigger market than console gaming. The major market of PC gaming comes from the Asia Pacific region and it is estimated to be a $15 billion industry, while in North America it almost a fourth of this, amounting to around $3.9 billion.

NVIDIA continues to benefit from the rebound of the PC market which led to growth in the PC gaming market. Revenue from GeForce gaming GPUs increased 15% in fiscal 2014. The company’s market share in discrete GPUs is also rising to an effect that NVIDIA now holds 65% of the market share in this segment. Back in 2010, this was an even market with AMD, but now the gap is widening every year

Outperforming Its Competitor in Notebook Gaming

This is a segment where NVIDIA anticipates a rapid growth and may out-perform its competitors. The latest Maxwell-based notebook GPU is slimmer and lighter and has higher battery life due to Maxwell’s enhancement of energy efficiency. Maxwell is based on Kepler architecture that competes with AMD’s Radeon R9 270. On the power efficiency front it beats its competitor AMD’s Radeon but we don’t witness any huge speed gain in the new Maxwell GPU. Finally, on the price front, it is much cheaper than Radeon with two variants priced at $119 and $149 as compared to $179 for Radeon.

What Makes NVIDIA Better

NVIDIA mainly concentrated on the GPU market while AMD was bootstrapped with its focus on CPUs and GPUs and also to some extent on gaming consoles. As AMD’s focus was distributed, NVIDIA only concentrated on the specialized market of GPUs and stimulated itself to be a market leader in graphic cards and GPUs.

Research and Development is the platform for any successful product development and enhancement. NVIDIA is extravagant on it. Its R&D budget enables it to churn out products that are innovative.

Conclusion

NVIDIA's latest products are doing well and its business has turned around. Its future looks bright with its new GPU, making it a good buy.


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