The MegaTrend Stock Just Revving Up Its MegaTrend Power (NVDA)
The Birth of a GPU Titan
Nvidia (NASDAQ: NVDA) was founded in 1993 by three seasoned computer and electrical engineers. They were Jenson Huang, a former microprocessor designer from Advanced Micro Devices (NASDAQ: AMD), Chris Malachowsky, a former electrical engineer from Sun Microsystems, and Curtis Penn, also a former microprocessor engineer from Sun Microsystems. Back in a time when personal computers had coarse resolution and spreadsheet programs, like Lotus 123 and word processor programs like Word Perfect were considered to have state-of-the-art graphics, these three collectively had the vision that one day personal computers would become media centers. That is, personal computers would become a place where your family would watch the news, watch music videos, and play lifelike video games.
Nvidia headquarters in Santa Clara, California. (Source: nvidia.com)
Boy, were they correct! Their approach was to build special purpose graphics cards for computers. Where previous computers processed graphics with their main central processors, Nvidia focused on adding high performance processers onto dedicated graphics cards.
In most cases, the number of bits doing the processing on these graphics cards outnumbered those on the motherboard’s main processor – more bits, faster processing, which equals faster graphics. Today, for example, many of Intel’s high-end processors run on 64-bit chips. In some cases, Nvidia’s graphics cards run on multiple linked processors with ten times this many bits.
Nvidia has an incredible history of firsts and milestone product placement. In 1997, they designed and produced the world’s first 128-bit graphics card. PGGP pick Microsoft (NASDAQ: MSFT) chose Nvidia to supply the processor for its Xbox video game console in 2000.
NASA and Nvidia worked together in 2004 to produce a 3D virtual model of the surface of Mars. This was accomplished using the first-ever graphics card with multiple linked graphics processors. Sony (NYSE: SNE) chose Nvidia graphics cards for their famous PlayStation video game console in 2005.
In 2006, Nvidia jumped feet first into making graphics processors for smartphones and tablets. The world’s first 3D ultrasound machine was made by Siemens in 2009 using Nvidia graphics processors.
Starting in 2010, the world’s fastest supercomputer, Tianhe-1A, was spec’d with Nvidia processors. Also that same year, Nvidia processors enabled the production of James Cameron’s highly vivid and graphically intricate movie, Avatar. The world’s first dual core processor for smartphones was produced by Nvidia the following year. Two years after that, Nvidia made the world’s first quad-core processor for smartphones.
NVDA’s Most Recent Technical Progress
Producing dedicated graphics processors with 7 nanometer (nm) wire technology is Nvidia’s latest and greatest effort to make even faster processors. The smaller the wires on the processor, the smaller the transistors used to process information, algorithms, operation sets, etc.
The smaller the transistors, the more that can fit on a single chip. The result is ever faster computer processors that can handle more complex computations in less time. In the fourth quarter of 2020, Nvidia released their GeForce 30 Series graphics cards, which were the first ever to use 7 nm wire technology.
Nvidia personnel refer to this as their Ampere Architecture. The previous generation of chips used the Turing Architecture. They relied on 14 nm wire technology and were far slower than the GeForce 30 Series products.
An Ampere based graphics card being held by company CEO, Jensen Huang. (Source: pcmag.com)
The advancement of technology never seems to falter at Nvidia. In March 2022, the chipmaker announced that it had developed processors based on 5 nm wire technology. The new architecture is named Hopper and will soon appear in the next generation of graphics cards. Specific products and release timing have yet to be announced.
What’s also interesting is that Nvidia plans to release general computer processors (not just graphics cards processors, a.k.a GPUs) using the Hopper architecture. These processors will be used in next generation supercomputers and are said to be specially designed to accelerate the speed and effectiveness of artificial intelligence algorithms. In the meantime, Nvidia plans to keep selling faster graphics cards using the Ampere architecture.
Nvidia will be introducing 5 nm wire technology in their new Hopper architecture for graphics processors (Source: wccftech.com)
Nvidia’s trajectory certainly is interesting. It started by developing dedicated hot-rod GPUs for the gamer crowd. However, uses for Nvidia graphics cards didn’t stop with graphics cards. It turns out that its ultra-highspeed processors are also ideal for cryptocurrency miners. For those guys, speed translated directly into more crypto money in their virtual pockets.
Indeed, sales of NVDA GPUs to crypto miners generated billions of dollars in revenue for Nvidia. This cash influx, as well as its ever-advancing knowledge of ultra-highspeed computing power, has encouraged Nvidia to branch out into platforms that support scientific computing, artificial intelligence, new data platforms, robotics, and many other computationally intensive fields.
In April 2022, Nvidia announced plans to open a new R&D center in Armenia. This center will further support Nvidia’s diversification in many additional computing fields.
Following its IPO in January 1999, NVDA stock has performed impressively, as can be seen in the stock chart below. The IPO price was $19.69 per share, and today the stock price is near $200 per share. Nvidia’s stock has split two-for-one three times to increase the number of shares at a constant market capitalization. The most recent split was in 2007 where two shares were traded for three.
For the fiscal year ending January 31, 2022, Nvidia made profits of nearly $9.8 billion on revenues of $26.9 billion. This was up for the previous fiscal year, even during the supply chain crisis. With performance like this in the wild economy we’re riding through right now, it’s impressive that Nvidia’s stock has performed admirably over the past year, as can be seen in the stock chart above.
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