These are the current two main drivers of revenue and will continue to be so over the next three to five years in our view. However, data center revenue has increased markedly and now rivals gaming. Nvidia's revenue by product line, below, shows the dominance of the original gaming sector. This has been largely due to the growth of manufacturing hubs in Asia as well as the growing Chinese middle class. Nvidia has been deriving a significant share of its revenue from Asia. Nvidia has invested heavily in the omniverse with 3D virtual worlds and sees this as a key component of its future strategy. The company splits its revenue according to automotive, datacentre applications, gaming and intellectual property, and professional visualizations. Currently, Nvidia operates across gaming, streaming via GeForce NOW, automotive applications for onboard display and infotainment units, and also provides units for cloud-based applications. The success of this led to Microsoft selecting Nvidia for its Xbox console. The GeForce was the company's first blockbuster gaming card and elevated the company to global prominence.
The initial focus of the company was on the gaming industry with the production of high-end graphics processing units (GPU), which helped power the explosion in gaming culture that took off in the 1990s.Īlso read: Apple Stock Deep Dive: AAPL price target at $100 on falling 2023 revenues Nvidia was founded in 1993 by three US computer scientists: Jen Hsun Huang, Curtis Priem and Christopher Malachowsky. Nvidia is part of the global semiconductor industry with operations spanning graphics cards and gaming, automotive applications and data centers. Macroeconomic backdrop, market cycle and sector analysisĮxecutive summary, recommendation and price target We surmise that this reduction in Nvidia's stock price presents a more sustainable entry point with risks of a valuation re-rating offset by continued strong revenue growth. We will outline our DCF model with revenue assumptions leading to a fair value share price for Nvidia as well as comparative models versus its peer group and index members. Inflation and supply chain issues have also caused a rotational shift from growth to value and from tech to defensive stocks. A series of rate hikes from central banks on both sides of the Atlantic have been aggressively priced in by equity markets.
This has been largely due to the shift from growth to value stocks as well as the changing macroeconomic picture. Nvidia was one of the top-performing stocks in 2021, but the picture has changed in 2022 with the stock falling by nearly 40% year to date.
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