Nvidia Corporation (NASDAQ:NVDA) is all about visual computing.
The company started as a high-end graphics card maker for users who were interested in having the best display quality you could get. That ranged from online gamers to research scientists.
Given that chip and card makers aren’t exactly in short supply, few investors gave this niche player much time. The thought was, NVDA may have a great graphics card, but it’s a “nice to have,” not a “need to have” kind of product.
What’s more, most chipmakers had perfectly serviceable graphics cards. Why contract out to yet another vendor when you already had a chipmaker that could provide you with a decent graphics card?
Those Days Are Gone Now
Quality graphics are no longer just a nice add on; they’re crucial now that processing speeds have soared and new technologies have been able to thrive. In this visual computing space, Big Data, virtual reality (VR) and the Internet of Things (IoT) are three major disruptive forces that lean heavily on quality rendering and fast processing.
Simply put, Big Data packages large data sets and then analyzes them to find any discernible patterns or trends. For example, a store can figure out what day and time is best for 30-something women to buy a shirt. Visualizing these data sets is very helpful in analyzing this process.
VR and its cousin, augmented reality (AR), are not only the hottest technologies in gaming, but are already revolutionizing other fields where interaction is highly prized. For example, medical schools are using AR tech to virtually operate on an augmented cadaver, rather than physically operating on one. The possibilities are just being tapped at this point.
IoT is another technology in its infancy. As artificial intelligence and bandwidth merge, opportunities are appearing everywhere, for instance in “smart” cars, homes, offices, you name it. One of the best examples nowadays is Amazon.com, Inc’s (NASDAQ:AMZN) Alexa or Alphabet Inc’s (NASDAQ:GOOGL) Google Home device, where you can do everything from order a pizza to set your thermostat just by talking to the thing. It recognizes your commands and then, through its connectivity, turns your request into reality.
NVDA is already working with many major car companies to create the next-generation car dashboard, as well as other interactive possibilities. It is helping scientists manipulate molecules and atoms to build better drugs. And, it’s building the chips that are featured in the newest gaming system from Nintendo Co., Ltd (ADR) (OTCMKTS:NTDOY).
These are just a few reasons that NVDA is up 282% in the past 12 months.
Part of this big move was because the entire semiconductor industry was weak because demand had slackened. But, this is a cyclical industry and it’s “game on” once again. Plus, NVDA has shown that it’s more than just a graphics card maker at this point. It is on the leading edge of the next generation of visual computing.
NVDA numbers for Q4 were recently released, and the stock came down from its 52-week highs on the news.
But, this is simply the pause that refreshes. The numbers were still impressive and there is significant untapped growth for NVDA stock. Management’s guidance may have been slightly conservative, but it’s likely that stellar growth will remain in Nvidia’s future for many years to come.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
