Nvidia (NVDA) GRAB AND GO 7-PACK - Left Brain Investment Research
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“Seeking Stocks
that can Double
in 2-3 Years”
GRAB AND GO 7-PACK
Nvidia (NVDA)
An investment in Nvidia is a play on the growth in gaming industry as well as advancement of data
center, AI and machine learning technologies that require high performance computing. The company is
a dominant player in the accelerated computing solutions market segment. Nvidia’s success depends
upon its ability to attract additional clients from different industry verticals to its high-performance
GPU technology while consistently upgrading its product portfolio through research and innovation.
Recommendation: Green Light
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9/18/2020 (These are hypothetical examples, not to be shown or distributed without permission of LBIR.)Nvidia (NVDA)
NVDA Performance vs S&P 500
NVDA (in Green) vs. S&P 500
700 4000
600 3500
3000
500
2500
400
Grab-and-Go 300
2000
1500
7-PACK 200
1000
100 500
0 0
NVDA S&P 500
Share Price (as of 09/17/20): $498.5
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9/18/2020 (These are hypothetical examples, not to be shown or distributed without permission of LBIR.) 1Nvidia (NVDA)
Company Overview CEO/Founder
▪ Nvidia develops Graphics Processing Units
(GPUs) and System on Chips (SoCs) ▪ Nvidia was co-founded by Jensen Huang in
1993. He still serves as the CEO and President
of the company.
▪ It initially focused on the gaming industry but
has extended its target markets to include data
centers, AI, and VR. ▪ He has been the leading force behind
Company’s consistent innovation.
Grab-and-Go
▪ Recently launched its upgraded range of GPU
7-PACK offerings that run on Ampere architecture. ▪ In 2017, he was ranked #1 on the list of top-100
best performing CEOs in the world.
▪ It also announced the $40 billion acquisition of
Arm Ltd to expand its addressable market ▪ He holds 3.77% of the total shareholding.
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9/18/2020 (These are hypothetical examples, not to be shown or distributed without permission of LBIR.) 2Nvidia (NVDA)
Total Addressable Market (TAM) Competitive Environment
▪ It competes with other graphics card and
▪ Nvidia total addressable market has been accelerated computing solution providers
consistently expanding as it grows its such as AMD, Intel, Xilinx etc. as well as SoC
footprints into several segments of the fast- products suppliers such as Ambarella,
growing technology industry. Samsung, Broadcom, Qualcomm, REC etc.
▪ As per company estimates, post the acquisition
Grab-and-Go of Arm Ltd., Nvidia will have a total
▪ In the core gaming sector, it holds 70% of the
market share and generates 3x revenue than
7-PACK addressable market of $250 billion by 2023. its nearest competitor.
▪ Its GPUs are considered best in class for
accelerated computing and are used by all
major public cloud providers.
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9/18/2020 (These are hypothetical examples, not to be shown or distributed without permission of LBIR.) 3Nvidia (NVDA)
Business Catalysts Headwinds/Tailwinds
▪ Next major catalyst would be the advancement ▪ Company’s key gaming and data center
of Artificial Intelligence technology, including segments have enjoyed significant tailwinds in
autonomous vehicles. the pandemic led “work from home”
economy.
▪ The acquisition of Arm Ltd. will provide
Nvidia access to smartphone and IoT market
Grab-and-Go segments.
7-PACK
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9/18/2020 (These are hypothetical examples, not to be shown or distributed without permission of LBIR.) 4Nvidia (NVDA)
Valuation
Estimates of Revenue Growth EV/Sales
1 2
▪ Revenue decreased from $11.7 billion in
FY 2019 to $10.9 billion in FY 2020 ▪ EV/NTM Sales stands at 18.7x
▪ Revenue fell by 6.8% on a YoY basis. FY
2020 revenue growth is expected to be
16.7%
Grab-and-Go
7-PACK
Free Cash Flow Operating Income
▪ Operating Income stood at $3.7 billion in
▪ FCF Margin stood at 39.2% for FY 2020 FY 2020
compared to 26.9% for FY 2019 ▪ Operating Margins stood at 34.2% for FY
2020, compared to 37.6% in FY 2019
3 4
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9/18/2020 (These are hypothetical examples, not to be shown or distributed without permission of LBIR.) 5What sets NVDA apart?
▪ Nvidia’s data center focused ▪ Its high-end 20 series graphics
GPUs are considered the best card was already the top rated
out there and are used by all gaming GPU and the company
major cloud service has raised the bar even further
providers including Azure, Quality of with launch of 30 series GPUs
Special/Unique AWS and Google. which are based on Ampere
Product/
Characteristics microarchitecture and are
Service
Grab-and-Go ▪ It consistently invests in R&D significantly faster than
to innovate new and previous versions.
7-PACK upgraded solutions which is
the reason why it dominates ▪ The recently released A100 data
the GPU market segment and center GPU delivers 20x
keeps competition at bay. improved performance than its
predecessor.
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9/18/2020 (These are hypothetical examples, not to be shown or distributed without permission of LBIR.) 6Why we rate NVDA a “Green
Light”
What we like… What we don’t like…
Holds strong industry leading position Market valuations are at an all-time high post
in its core and fast-growing gaming the stock rally in recent months
and data center market segments.
.
Large and growing addressable
market.
Consistent investment in research and
Grab-and-Go development to stay ahead of the
curve and gain additional market
7-PACK share.
Business Rating: (6) Security Rating: (4)
• NVIDIA has delivered strong growth in top and bottom line • At Fwd EV/Sales of 18.7x, valuation is at a premium as
over the years driven by growth in addressable market as well compared to its historical averages.
as innovation.
• Well positioned to benefit from changing technological
landscape with growth in gaming, high-speed cloud
computing, data centers, AI, IoT, autonomous vehicles, etc.
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9/18/2020 (These are hypothetical examples, not to be shown or distributed without permission of LBIR.) 7You can also read
