NVIDIA (NVDA, Financial) posted fantastic results for the second quarter, outpacing analysts’ estimates on both the top line and the bottom line. The company is seeing good momentum in areas such as gaming, datacenter & cloud and mobile. Management is confident that the company will improve in the future. It is shifting its focus to the car segment. So, loaded with a lot of opportunities, let us see how far NVIDIA will go and if it will be able to gain market share in the future.
On the right path
NVIDIA posted 13% growth in the quarterly revenue, clocking $1.10 billion. Its financial results were impressive, and it met Wall Street’s expectation. Analysts, on an average, had also expected $1.10 billion. NVIDIA's net income came in at $128 million as compared to $96 million a year ago. On the earnings front, on a non-GAAP basis, NVIDIA posted EPS of $0.30, which is more than the $0.23 per share it posted a year earlier.
NVIDIA is a well-known name in the graphics segment, providing graphics chips for various devices. The company is on fire as it is seeing commendable growth. The company’s guidance was also strong.
Strong segments
PC gaming continues to be a profitable venture for NVIDIA. This segment is showing good growth on a year over year basis. GeForce is the fast selling center in the PC gaming ecosystem. It has recently introduced a new entry-level GeForce GTX GPU.
The company is counting on Tesla as well, which has seen a good quarter. Tesla sales are growing at an impressive pace. Exciting news for Tesla is that many OEMs had announced that they will ship Tesla-based servers combined with ARM64 SoCs.
On the other hand, GRID sales for the company are also ramping up. The service is doing well in the market and has attracted more than 10,000 users in the first eight weeks of its launch. After that, NVIDIA has also launched GRID Test Drive. The company believes that this will help enterprise IT professionals. All these can be good growth drivers for NVIDIA.
Moving on to the mobile computing segment, the tablets powered by its Tegra K1 technology are seeing good performance in the tablet market. This next member of the SHIELD family, known as the SHIELD tablet, is especially designed for gaming. So it is seeing huge response from the gamers, driving its revenue to the next level. The SHIELD tablet is one of the important elements of NVIDIA’s gaming strategy.
NVIDIA also seeing huge opportunities in the automotive segment. According to the recent updates, Volkswagen has recently announced that the new Passat vehicle will be equipped with Tegra to run its infotainment system, which strengthens NVIDIA’s long term prospects.
Also, the new GT featuring two Tegra chips has already started production in Europe. Further, Audi has also upgraded its A7's infotainment system to include Tegra. Lastly BMW is bringing in its new models, namely i3 and i8, and it has already announced plans to embed them with Tegra. Tegra is also seeing good application in Xiaomi’s Mi Pad as well as the Tegra K1 Chromebooks. This is expected to tap the market and it is expected that this market will multiple nearly three times in the coming three years. This is a golden opportunity for NVIDIA and the company looks geared up for this.
Conclusion
NVIDIA is in a good position to improve its performance. It looks like a good investment option for the long run that investors should not ignore.
