There were several factors for NVDA’s growth on the gaming side.
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28nm to 16nm transition
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AMD losing focus on discrete GPUs
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Crypto market
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28nm to 16nm transition
Before 2016, NVDA (and AMD) had been stuck on the 28nm process for several years. It just wasn’t cost effective to build bigger dies with more transistors. Once 16nm (14m, for AMD) became available at the merchant fabs, new GPUs were released. Transistor counts were up 2X-3X, with the same die size. Performance was up roughly 50%. This was the best price/performance jump in over five years. -
AMD losing focus on discrete GPUs
AMD was in dire straights from 2008 to 2012. Fabs were sold, HQ was sold, multiple rounds of layoffs, a couple of CEO changes and R&D cuts. AMD’s share of discrete GPUs dropped down to 20%. AMD did well in the mid-low end. But the high end, where most of the profits are, was left for NVDA. -
Crypto market
There was a small bubble (by today’s standards) in 2013-2014. AMD’s cards with a $400 MSRP briefly spiked to $1000. Wafer starts to shipping cards is about six months. AMD ordered a bunch of GPU wafers to meet the expected demands. The bubble burst, and AMD wrote off some $200M in unsaleable GPUs. The current bubble went much higher and lasted much longer than before. We’ve experienced a six month period where every GPU has sold well above MSRP. It’s not clear what will happen when the bubble bursts this time.
Note that “Gaming” still contributes to over 50% of NVDA’s revenues. However, the FY17 to FY18 gaming revenue growth was only 36%. Gaming has been a drag on NVDA’s overall growth rate. Total revenue growth was 41%, and all of non-gaming was 47%. I expect that non-gaming will be 50%+ of NVDA’s revenues by FY2020. And generally, the gross margins are currently better on non-gaming devices.
Disclamer: I am still long on NVDA. i reduced my holdings by two-thirds in January. The next 10x in stock price will be much harder than the last 10x.
http://s22.q4cdn.com/364334381/files/doc_financials/quarterl…
Source for NVDA’s revenue breakdowns