Good ol’Nvidia doing Nvidia things.
They reported quite amazing Q1 earnings on Thursday. They are thriving in the face of Corona, which I was expecting. Turns out many people (like me) needed to update some home computers in light of increased kids at home and WFH and opted to get a more future proofed system with a good graphics card. This sustained high gaming segment sales.
But the real story is data center had an absolute monster quarter. T4 inference is kicking butt and they launched the next generation Ampere chip the A100 which offers up to 20x performance over Volta in certain workloads and offers the greatest diversity of any chip ever made. There is no competition for this data center chip and will not be for years and then Nvidia will be on to the next AI processor. AI and HPC are growing up in the age of Nvidia. It’s their market. This chip is so powerful it is the first AI chip designed to be divided up into up to 7 individual instances. This is great for hyperscalers to put in their DCs to then rent out “space” on each chip.
This new chip, Nvidia’s first 7nm, shipped in Q1 and contributed to revenue. Mellonox deal closed current quarter (Q2) so does not contribute to these numbers.
Rev - $3.08B (+39%) beats by $80M
EPS - $1.80 (+104%) beats by $.12
GM - 65.8%
Net Income - $1.12B (+106.3%)
That’s a 36% profit margin. Printing cash.
Big story is that data center segment
Rev - $1.141B (+80%) <—Amazing
There will be several more quarter of hyper growth in data center as the A100 really ramps. Ampere is a bigger game changer than Volta was. And HPC and AI training is in high demand with all the cloud compute going on and all the research being done. They are having a huge impact on research of all kinds for Corona. Cures, vaccines, data research and what I thought was the coolest was imaging AI for detecting lung irregularities in patients.
Gaming is strong. Grew +27% in seasonally weak Q1 quarter.
They will have some headwinds in automotive. Autonomous cars are obviously not as hot an item for car companies and ride sharing platforms who are struggling to survive and depressed car sales means not as many infotainment chips too. This segment is expected to be down 40% qoq next Q. But it’s the smallest segment anyways.
Guidance is for $3.65B +/- 2% or about $3.7B on high end.
With no beat that’s 44% rev growth yoy.
Mellanox grew 40% to $428.7M in most recent quarter and will be contributing to Q2 numbers (partial quarter). Deal closed on Apr 27. So we are looking at about 2 months of contribution. Haven’t looked at CC yet so maybe they broke out the numbers. Luckily for Nvidia Mellanox is growing as fast as Nvidia and also has a mid 30’s profit margin, so the acquisition will be perfectly accretive to performance.
I re-entered at a 5% position last November. Stock is up about 80% since then.