I've been spending a few days so far investigating the technology company, Nvidia (NVDA: NASDAQ). This is a firm famous in the PC computing world, especially for graphics cards. They were founded in 1993, and started out in designing PC circuit (graphics) cards which added enhanced texturing of images whilst the computations involved in the creation of the graphics remained on the CPU. Interestingly, two of the founders, Jensen Huang (CEO and President) and Chris Malachowsky (Fellow) remain on board, something I find very encouraging. In the mid to late '90s the term GPU was borne. Some slight contention about exactly when the GPU was "invented" and by who. Nvidia were clearly fundamental in this. The key thing about the GPU is that bulk of the computational work in rendering imaginery, especially for computer games is off loaded onto this unit. The GPU differing from the CPU in the respects:
- large amounts of matrix and other maths operations (planar and 3-D geometry) occur in parallel
- specialised units for decomposing shapes into collections of triangular primitives
- colouring, lighting, clipping etc. of backgrounds whilst a player's viewpoint changes realtime.
2019 - hpc, data center.
From https://www.nvidia.com/en-gb/about-nvid ... -timeline/. Also rans 2010 some participation in the worlds fastest supercomputer https://en.wikipedia.org/wiki/Tianhe-1/
From the above perusal of their potted history, it's clear that the diversifications into AI, and machine learning, whilst being diversifications, are very natural ones given the emphasis on parallelisation, floating point maths, matrix algebra.
As with similar companies e.g. AMD, this one has a very high valuation - about 87 x earnings as I type. Before looking at various bull and bear scenarios, I'll upload a few numbers. The firm are always outrageous cash rich, it's pointless including leverage or gearing KPIs as they are non-existent.
So whilst the current valuation is crazy high, the firm has fantastic fundamental values, with ROCE/ROE typically between 20-40%, top and bottom line growth CAGR over the past 5 years about 27% and 44% respectively. To me it also seems likely their growth will continue since their IP can naturally move between graphical (multi-dimensional) and AI worlds over time, in addition to reaping the rewards akin to cloud compute and data center growth.
Matt