NVDA - Embedded Expectations Analysis - 2021 06 24
NVIDIA Corporation (NVDA:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 48.9x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may be concerned about the data center business, their VMware partnership, and gaming business growthSpecifically, management may be overstating the capabilities of their cloud data centers, AI growth opportunities, and the necessity of ray tracing for game developers. Additionally, they may lack confidence in their ability to execute their strategies with VMware and continue addressing the needs of data center customers. Furthermore, management may be exaggerating the potential of the Enterprise Software business, Omniverse, and the RTX 30 Series GPUs. Moreover, they may lack confidence in their ability to sustain gaming business growth and continue innovating for target industries. Finally, management may have concerns about gross margin declines, the quantum computing industry outlook, and the sustainability of crypto mining tailwinds
NVIDIA engages in graphics processing unit (GPU)-based visual computing and accelerated computing platforms. The company has two segments, GPU and Tegra Processor, which are based on a single underlying architecture. The company's GPU product brands are aimed at markets including GeForce for gamers; Quadro for designers; Tesla and DGX for artificial intelligence data scientists and big data researchers; and GRID for cloud-based visual computing users. The company's Tegra brand integrates an entire computer onto a single chip, and incorporates GPUs and multi-core CPUs to drive supercomputing for autonomous robots, drones, and cars, as well as for game consoles and mobile gaming and entertainment devices.
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