How could Nvidia grow so fast and why could it grow again?

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NVIDIA could grow much faster in the coming years thanks to the Advances in Graphics Cards and Market Dominance. Not forgetting other catalysts in the form of data center and automotive market according to Harsh Chauhan en The Motley Fool.

“If you had $ 10,000 to invest in early 2016 and you bought Nvidia stock with that money, your initial investment would be worth roughly $ 250,000 at this point,” says Chauhan.

Nvidia has far outperformed the overall market over the years thanks to its strong product suite, which has helped it attract millions of customers and dominate a rapidly growing space. You now offer products that offer more bang for your buck to existing customers, allowing you to increase Average Sales Prices (ASP) and attract new customers. As such, Nvidia may repeat, or improve upon, its excellent stock market performance once again in the coming years.

Nvidia’s dominance in the GPU (graphics processing unit) market has accelerated its revenue and profit growth over the years. In the fiscal year 2016, the company had reported only $ 5 billion in annual revenue and $ 929 million in adjusted net income. In the fiscal year 2020, which ended in January of this year, annual income they shot at $ 16.7 billion and adjusted net income had increased to $ 6.2 billion.

This results in a 27% compound annual revenue growth rate during the period of five years, while non-GAAP net income they grew a 46% annually. Lately it has been outpacing its historical growth. Its revenue for the first quarter of fiscal 2021 increased by 84% year over year a $ 5.66 billion, while the adjusted net income they increased a 107% to $ 2.3 billion.

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Analysts forecast that Nvidia’s surge will continue this fiscal year, with revenue expected to rise by 49% compared to last year and that earnings per share increased by a 58%. Nvidia can maintain its extraordinary growth beyond this year for a few simple reasons.

First, control the 80% of the discrete GPU market, according to Jon Peddie Research. The discrete GPU market is expected to generate $ 54 billion in annual revenue by 2025 compared to $ 23.6 billion last year. Nvidia’s market share puts it in the top spot to capture a large chunk of the additional revenue opportunity, and it is unlikely to give way to smaller, advanced micro-devices due to its technological edge.

According to a survey conducted by the game distribution service Steam, badge card RTX 3090 is outselling the latest cards in the AMD RX 6000 series in a proportion of 11: 1. What’s surprising is that the RTX 3090 is outperforming the entire AMD lineup despite its high starting price of $ 1,499, making it significantly more expensive than the AMD flagship RX 6900 XT that starts at $ 999.

The reason this may be the case is that the latest RTX 30 series cards outperform AMD’s offerings based on independent benchmarks and are also competitively priced. For example, the RTX 3080 that starts at $ 699 supposedly outperforms the more expensive RX 6900 XT. Meanwhile, Nvidia takes a substantial advantage when it comes to offerings with identical prices. The RTX 3070 Ti that starts at $ 599 is reportedly a 21% faster than AMD’s RX 6800 which starts at $ 579, indicating that Nvidia offers more for the money.

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