💾 Is Nvidia Chipping Away To Glory?

GME, AMC soar again! Snowflake CEO asks for patience.

Hey Global Investor, here’s what you need to know before the US markets open.

Market Snapshot 📈

S&P 500 (Wednesday’s Close) 4,195.99 +7.86 (0.19%)

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💾 NVIDIA: Chipping Away To Glory?

NVIDIA Corp (NVDA) reported record revenue for Q1 handsomely beating estimates. The gaming segment contributed to nearly half the revenue. The company also announced a 4-to-1 stock split, the biggest in its history. (Tweet This)

Bridging The Demand-Supply Gap

The demand for semiconductors has shot through the roof over the last year. Chip manufacturers have been unable to cope with demand across the board around the globe. From gamers to automobile manufacturers, everybody is vying for a piece of silicon. The demand-supply mismatch has impacted production schedules, customer orders, and consequently, company sales.

This historic shortage notwithstanding, the global semiconductor market is expected to grow 12.5% in 2021 to $522B. The computing, telecom and automotive sectors will drive this growth. With the advent of cryptocurrencies, crypto-miners have been deploying chips to help them mine cryptos faster. This has further exacerbated the demand-supply gap for silicon chips.

NVIDIA has tried to address this issue with a two-pronged strategy. First, NVIDIA made its existing chipset less attractive to crypto-miners. The company achieved this by adding new software that identifies crypto algorithms and automatically reduces the chip’s processing power. This has allowed NVIDIA to divert the chips for their intended use in sectors that need them most.

Secondly, the company has developed an energy-efficient chip,  the Cryptocurrency Mining Processor (CMP), which is specifically targeted at crypto-miners. CMP sales for the quarter stood at $155M and the management expects CMP sales to be $400M for the next quarter.

Just Another Split?

Key Stats for Q1:

  • Revenue: $5.66B Vs $5.41B estimated
  • EPS: $3.66 Vs $3.28 estimated.

For the upcoming quarter, Nvidia expects revenue of $6.3B, a 62% jump year-over-year.

This week, the company announced its biggest stock split in its three-decade history with investors getting three additional shares for each share they currently own. Nvidia split its stock four times between 2000 to 2007. The first three were in the 2-to-1 ratio while the one in 2007 was 3-to-2.

NVIDIA’s stock split may pave the way for the company to join the Dow Jones Industrial Average Index. With the Dow being a price-weighted index, the company’s post-split price of $150 will make it an appropriate candidate to join the index. NVIDIA’s $40B acquisition of ARM from SoftBank is also on track to close early in 2022.

Gaming, crypto, and automobiles are all chip-dependent. With NVIDIA at the center of action for customers in each of these sectors, the company seems well-positioned to cater to these verticals one chip at a time! And in doing so, it’s become a happy hunting ground for investors.

Market Reaction
NVDA ended the day at $628, up 0.33%, and has fallen 1% in after-hours trading. The stock is up 80% in the last twelve months.

Company Snapshot 📈

NVDA $628.00 +2.09 (0.33%)

Analyst Ratings (39 Analysts) BUY 82%  HOLD 13%  SELL 5%

Newsworthy 📰

Shutter Down: Morgan Stanley says to close Indonesian onshore equities business. (MS +0.51)

Big Deal:Amazon buys Hollywood studio MGM in $8.45B deal (AMZN +0.19%)

Hang On: Snowflake CEO urges investors to be patient with stock during cloud transition (SNOW +1.82%)

Later Today 🕒

  • Salesforce.com, Inc. Earnings (CRM)
  • Dell Technologies Inc. Earnings (DELL)
  • VMware Inc. Earnings (VMW)
  • Autodesk Inc. Earnings (ADSK)
  • Twitter Annual General Meeting (TWTR)
  • 6:00 PM IST: Initial Jobless Claims
  • 6:00 PM IST: GDP Revision (SAAR)
  • 6:00 PM IST: Durable Goods Orders

Fun Fact of The Day 🌞

The best selling product of all time is the Rubik’s Cube

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