• Reinhardt Coetzee

Nvidia’s Earnings and Jensen’s Insights

Updated: Feb 1

Nvidia’s earnings call is one of the most anticipated events each earnings season as CEO Jensen Huang maps out his vision of the future.

Last week Nvidia and the Chinese tech companies released quarterly results. Nvidia’s earnings call is one of the most anticipated events each earnings season as CEO Jensen Huang maps out his vision of the future. It’s not only relevant to Nvidia’s shareholders, but anyone interested in all the industries that the company supplies, including cloud computing, gaming, AI, visualization and blockchain technology.

The results were excellent as expected. Ahead of the results, the share price has already gained nearly 50% in 6 weeks, and it quickly added another 15% afterwards.


Quarterly revenue increased by 50% from a year earlier to $7.1 billion and operating income increased 91% to $2.7 billion.


Revenue growth by segments were as follows:


Data center: 55%

Gaming: 42%

Professional visualization: 144%

Most of the revenue still comes from the data center and gaming segments, but if the visualization business keeps growing at this rate it will soon be contributing almost as much to the business.


Notable comments from Jensen Huang during the earnings call


Avatars and AI powered digital agents


Jensen was asked about the more immediate metaverse applications that can actually be monetized. He mentioned Nvidia’s Omniverse Avatars, which the company website describes as connecting the

company’s technologies in speech AI, computer vision, natural language understanding, recommendation engines and simulation technologies. Avatars created in the platform are interactive characters with ray-traced 3D graphics that can see, speak, converse on a wide range of subjects, and understand naturally spoken intent.

These avatars will soon be available, and once created can be deployed for around $1,000 a year. Avatars can be used by developers and creators, retail stores, restaurants, airports, train stations and office buildings. He also believes that avatars could be deployed with new vehicles to act as an interface between the driver and the vehicles systems.


Chips vs software


The CEO also commented on the relationship between chips/processors and software, saying “Chips are enablers, but chips don't create markets, software creates market.” Nvidia is forming partnerships with some of the worlds leading software companies with its Omniverse platform, and this comment underscores the importance of this investment.


On cloud computing


When asked about the data center market next year, Huang said “

we expect next year, the cloud, the cloud service providers to scale out their deep learning and their AI workloads really aggressively and we're seeing that right now.”

This is an important observation about cloud computing and AI and implies more growth (and spending) ahead in these industries. He also said that he thinks every server will be GPU accelerated one day, compared to the current level of less than 10%. This gives us an indication of the potential market growth ahead for GPU manufacturers. Not only is the market growing, but the current penetration is actually very low.

Nvidia is arguably quite expensive now. But any weakness in the share price may be short lived as investors scramble to own a piece of one of the companies inventing the future.


Nikeland on Roblox


On a separate note - Nike has created its own virtual world on Roblox called Nikeland. Visitors can compete in mini games, use an accelerometer to transfer real world movement to online play, and create their own avatars with Nike apparel.

We can expect to see a lot more brands doing things like this and competing to connect with consumers. This will be great news for digital artists and the companies that enable digital creativity.

This is a marketing communication and should not be taken as investment advice, personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared
without taking into account any particular recipient’s investment objectives or financial situation and has not been prepared in accordance with the legal and regulatory requirements to promote independent research.

 

This site makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared utilizing publicly-available information. Your
capital is at risk. Past performance is not indicative of future results. 

 

Stock returns for portfolio and individual  trade returns correct as of 2022/02/03

© 2022 by reinhardtcoetzee.com

  • eToro-share-img2
  • Facebook
  • YouTube
  • LinkedIn

reinhardtcoetzee.com