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Why NVIDIA shares jumped 121% in 2020

What happened

NVIDIA‘s 09.30 NASDAQ: NVDA the share price rose 121.9% last year, according to S&P Global Market Intelligence. The graphics specialist has launched new graphics processors (GPUs) in its two largest segments – data center and games – which have caused great demand.

In September, NVIDIA made waves in the chip industry by announcing the $ 40 billion acquisition of ARM Holdings, controlled by SoftBank Group. The deal still needs to be subject to regulatory scrutiny, but it will significantly improve NVIDIA’s ability to provide state-of-the-art artificial intelligence (AI) solutions using ARM̵

7;s chip design.

The side of the A100 GPU.

NVIDIA’s Amper-based GPU. Image source: NVIDIA.

And what

The best companies in the cloud are implementing NVIDIA’s new A100 GPUs, which are based on the latest Ampere chip architecture. This fueled a record year for NVIDIA’s data center business, with segment revenue growing 80% year-over-year in the first quarter, 167% in the second, and 162% in the third.

In addition to strong data center performance, interest in gaming erupted in 2020, providing record sales for NVIDIA RTX’s GPU business. The segment hit a quarterly record of $ 2.27 billion in fiscal third quarter revenue, up 37 percent from a year earlier.

Now what

One catalyst to look at in the short term is the impact that the recent jump in cryptocurrency prices could have on the growth of the gaming segment. The RTX 30 series graphics cards have sold out, in part due to high demand from cryptocurrency miners. This means that the gaming segment is likely to expect great results, while NVIDIA reports fiscal results for the fourth quarter.

As for the data center segment, NVIDIA is still in the early stages of growing its A100 GPU. He sees technology giants and researchers buying more of these new artificial intelligence talk system chips and referrals.

Looking at the big picture, the ARM deal could significantly extend NVIDIA’s leadership in the semiconductor industry. But no matter when the deal is approved, NVIDIA’s current leadership in graphics processing puts the company in a great position to deliver returns to investors, as organizations increasingly rely on the advanced computing power of graphics processors to cope with the workload. AI.

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