6 reasons nvidia stock is a buy
TRANSCRIPT
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6 Reasons NVIDIA is a Buy
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Despite a weak PC market, there are still plenty of reasons for investors
to consider NVIDIA
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• Despite the PC market slump, sales of NVIDIA’s gaming graphics cards are soaring
• In the latest quarter, NVIDIA’s gaming revenue jumped 59% year-over-year
• Sales of PC games are expected to surpass sales of console games by 2016, according to research firm PwC
• NVIDIA is in position to benefit from the continued growth of PC gaming
1) A booming gaming business
Image source: NVIDIA
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• At the end of the most recent quarter, NVIDIA had:– $4.5 billion of cash– $1.4 billion of debt– $3.1 billion of net cash
• This large cash balance allows NVIDIA to fund substantial share buybacks, totaling $766 million over the past twelve months
• Cash also gives NVIDIA room to invest in new initiatives, or make acquisitions
2) An extremely strong balance sheet
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• This excessive cash makes NVIDIA stock appear more expensive than it really is
3) The stock is cheaper than it looks
Normal P/E ratio
19.0
Normal P/FCF ratio
12.7
Cash-adjusted P/E ratio
14.1
Cash-adjusted P/FCF ratio
9.4
Based on trailing-twelve-month figures, excluding a one-time charge related to the wind-down of NVIDIA’s modem business
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• NVIDIA’s Tesla GPUs dominate the high performance computing accelerator market
• NVIDIA is teaming up with IBM to build the world’s fastest supercomputer for the Department of Energy, featuring next-generation GPUs
• NVIDIA GRID, a graphics virtualization platform, is growing in popularity. GRID customers tripled year-over-year in the latest quarter, and one-quarter of Fortune 100 companies are now trialing or deploying the technology
• Despite a recent hiccup in HPC and cloud growth, NVIDIA’s enterprise business has room to grow
4) Enterprise growth potential
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• Over the past year, NVIDIA has consolidated its lead in the discrete GPU market
5) A dominant market share
Q3 201
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50%
10%20%30%40%50%60%70%80%90%
100%
Add-in Board Unit Market ShareNVIDIA AMD
Data source: Jon Peddie Research and Mercury Research
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• NVIDIA’s mobile GPU business, Tegra, has shifted to mainly focus on the automobile
• NVIDIA’s automotive revenue rose 76% year-over-year during its latest quarter to $71 million
• Tegra chips can power both in-car dashboards as well as advanced driver assistance features
• NVIDIA is positioning Tegra to be the brains behind the eventual self-driving car, working with more than 50 companies interested in its Drive PX system
6) Self-driving carsNVIDIA Automotive Partners
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