NVIDIA CorporationNVDA , widely known for its video gaming chips, is a part of one of the top-ranked industries and is poised to lead the industry in the near future. The company has a Zacks Rank #1 (Strong Buy). The industry (Semiconductor) it falls under has a Zacks Industry rank of 22/265 (Top 8%).
The stock is well set on the growth trajectory, gathering momentum from its positive earnings surprise history and strong fundamentals. Also, shares of NVIDIA have posted an incredible one-year return of 117.4% and a year-to-date return of 90.1%.
NVIDIA delivered positive earnings surprises in the last four quarters with an average beat of 28.5%. The company has a market cap of $33.27 billion with long-term earnings growth expectation of 10.3%.
Over the last 60 days, 12 out of 13 estimates for NVIDIA were revised upward for fiscal 2017. The Zacks Consensus Estimate for fiscal 2017 increased 18.6% to $1.85.
Why the Rise?
It's almost been a month since NVIDIA has reported better-than-expected second-quarter fiscal 2017 results. Post the release, the stock has been on the rise.
NVIDIA has pioneered the art and science of visual computing. With a singular focus on this field, the company offers specialized platforms for the gaming, automotive, data center and professional visualization markets. Its products, services and software deliver amazing experiences in virtual reality, artificial intelligence and autonomous cars.
NVIDIA's foray into the autonomous vehicles and the automotive electronics space has been driving this stock higher since mid-2015. It should be noted that in the last reported quarter, the company witnessed a 68% year-over-year surge in automotive segment revenues mainly driven by premium infotainment and digital cockpit features in mainstream cars.
Notably, during the 2016 CES event, the company unveiled a computer chip called Drive PX 2 to power self-driving cars. Drive PX 2 is considered to be as powerful as 150 MacBook Pros, and has the capacity to power 12 video camera inputs and sensor fusion. The chip, according to NVIDIA, can run about 24 trillion deep learning operations per second, thereby enabling driverless cars to determine the next move in a fraction of a second.
Furthermore, NVIDIA's focus on GRID platforms can increase GPU adoption in data centers, giving it an advantage against its competitors. NVIDIA GRID is a powerful GPU-based platform that supports corporate virtualized desktops in data centers, cloud gaming services and design software-as-a-service.
Although gaming is the key to NVIDIA's growth, computing is becoming increasingly more visual, given the new-age tablets that are seeing tremendous demand. According to NVIDIA, its High Performance Computing (HPC) and data centers are expected to witness tremendous growth over the long run. The company has recently introduced its latest HPC technology - Tesla P100 GPU Accelerator, which NVIDIA claims will provide higher efficiency and performance to enterprises while incurring 70% lower capital and operational costs. It has also introduced Tesla M10 GPU, which allows enterprises to connect up to 64 users per board or up to 128 users per server with just two boards. This will help organizations to lower their per user cost. Continuous product launches in the computing segment is a positive for a company like NVIDIA, which is witnessing increased demand for its graphics chips.
As things stand now, we believe that NVIDIA's innovative product pipeline, mobile processor Tegra K1 and GeForce GTX 980 for desktops and mobiles will boost top-line growth. Moreover, strength in gaming and high-end notebook GPUs is another catalyst.
Stocks to Consider
Some stocks in the broader technology sector worth considering are Ambarella, Inc. AMBA , Seagate Technology Plc STX and Cirrus Logic Inc. CRUS , all of which sport a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .
Interested in IPOs? Check out the special edition of Zacks Friday Finish Line below, where Editor Maddy Johnson and Content Writer Ryan McQueeney interview Kathleen Smith of Renaissance Capital about the IPO market in 2016 (see part two here ).
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>