The 2020 pandemic hit many companies hard, while other companies took it as a chance to grow, seemingly unaffected by the state of the world around them. NVIDIA (NASDAQ:NVDA) came out as one of those thriving businesses and achieved gains of 122% in 2020.
The company’s graphics processing units (GPUs) were present and needed for trends that accelerated exponentially due to the pandemic, boosting the company’s presence in the market and overall stock performance. NVIDIA’s stock has gone up more than 3,000% in the past ten years.
Given these gains, many investors are tempted to invest, while others think that the cow has already been milked. The latter is highly unlikely. Many of these new trends behind NVIDIA’s growth have plenty of room to grow, giving the company a big opportunity to grow as well.
Here are 4 reasons why you should invest in NVIDIA.
NVIDIA and AI go hand in hand
High-end GPU’s play a key role in artificial intelligence (AI). Parallel processing used in rendering realistic images in video games utilizes AI’s unique capabilities to deliver incredibly lifelike results.
While everyone is taking a shot at developing a dedicated AI processor, NVIDIA’s GPUs are still the weapon of choice for most data centers and researchers that run AI and other algorithms of similar sophistication.
NVIDIA’s data center segment includes processors used in data centers, cloud computing, and AI. It has become the company’s main growth factor. Revenue in this segment increased 125% year over year in 2020 and ended the year switch plenty of traction.
NVIDIA’s presence in cloud computing is undeniable
Cloud computing has become a norm and has been ongoing for some time. The pandemic kicked this trend towards the stratosphere, with more and more companies adopting cloud computing as the days went by.
NVIDIA’s GPU has been present in most cloud computing systems and operations. The hardware’s ability to handle parallel processing has made NVIDIA the primary pick for the world’s top cloud computing providers like Amazon’s AWS, Alphabet’s Google Cloud, and Microsoft’s Azure Cloud.
NVIDIA is the current champion and plans to hold unto that title
NVIDIA is always focusing on innovating technology and looking into the future of computing hardware. It is the current champion when talking about dedicated gaming processors. The company is the favourite pick for hardcore gamers everywhere, holding 82% of the GPU market.
NVIDIA is way ahead of the competition and is not planning on slowing down anytime soon. The company introduced its latest line of processors that offered a breakthrough rendering experience of light and shadow through Ray tracing.
Ray tracing is a technology that manages to recreate the pathing light in the real world in the digital world in real-time, making it the most sought-after technology by gaming enthusiasts and many digital artists worldwide.
It released a trio of RTX (ray tracing) processors, which have quickly become the standard, providing the best digital visuals in the market.
The gaming industry represents practically half of NVIDIA’s revenue. The segment increased 67% year over year and shows no signs of slowing down. With NVIDIA being the top dog for processing, the company is bound to benefit from this segment’s growth.
Fiscal 2021 was a fantastic year for NVIDIA. Its earnings per share of $6.90 grew 53%, and revenue of $16.68 billion climbed 53% year over year.
NVIDIA isn’t just sitting down gloating either. It recently made announcements that it will venture into the CPU market and its Grace CPU, targeted mainly at data centers, aiming to deliver 10 times the performance of current CPUs.
This opens a new pathway to where the company can expand. It can take the entire market by storm and be a presence in nearly all aspects of the hardware industry.
Analysts estimate that over 80% of NVIDIA’s customers have yet to upgrade to the company’s latest processor generation, leaving much room for growth and sales.
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