NVIDIA Corporation (NVDA, Financial), the world-renowned visual computing company, has been pretty volatile in the recent weeks. The company operates through two segments -- GPU and Tegra Processors. Although NVIDIA’s stock was hammered due to the company’s light guidance, it still has many growth drivers going forward, which is why it is still a great buy. Let’s take a look at two of the company’s biggest opportunities and analyze why the company has room to rum higher.
Automobile sector is a growth driver
Automotive revenue had a record quarter at $77 million, escalating 121% year over year. Nvidia’s Tegra X1 processor is the most popular processor being used in vehicles for more advanced features. With the help of Tegra X1 processor, vehicles are becoming more advanced and computerized and many safety features are added in vehicles. This technology can sense and read information and can be implemented in self-driving cars. The technology facilitates visage like self-parking ability. At GTC, 25 universal automakers and Tier 1 dealers were characterized, counting developers and researchers from companies such as Audi, BMWÂ (BMW), Delphi (DLPH) and Elektrobit (EBC1V). Their eagerness reveals the interest in and growing importance of visual computing for automotive.
Gaming market presents a huge opportunity
Total gaming hardware market is estimated to be over $100 billion. The opportunity is huge for NVIDIA and it has taken the necessary steps to make the most of it.
NVIDIA's SHIELD and GRID will go far in powering development in this section. The organization's new comfort will be an Android TV support that conveys stimulation of various types to individuals' lounge rooms. Android gaming on TVs will upset the market as indicated by NVIDIA.
Furthermore, NVIDIA's Tegra processors convey industry-driving rich visuals and responsive performance for the wide scope of gadgets in market – from keen gadgets to gaming reassures. This advancement empowers automakers to offer exceedingly propelled frameworks coordinated into the vehicle. With automobile sales development ready to stay sound, NVIDIA's automobile fragment can be a development driver going ahead.
Outlook
Bearing in mind the potential of the PC gaming sector, the chipmaker expects revenue to be roughly $1.08 billion-$1.12 billion, in the upcoming quarter. The company is yet to witness the positive impact of its presence in the automotive segment, which is still in its early stages.
Conclusion
NVIDIA is currently trading at 19x trailing earnings and has an attractive dividend yield of 1.8%. The company offers strong growth prospects and is diversifying its revenue stream. The company has two massive opportunities and has taken the necessary steps to benefit from it. Given NVIDIA’s presence in the automobile and gaming segment, the company should be able to overcome the weakness of the PC market. Hence, I think investors should ignore NVIDIA’s guidance and should focus on the company’s long-term prospects. NVIDIA definitely has potential to move higher in the coming months and deserves a place in your portfolio. So, in my opinion, NVIDIA is a great buy at present levels.
