NVIDIA Stock

Company strategy and future

In recent years, NVIDIA has experienced rapid growth as a producer of graphic chips for games, virtual reality products and bitcoin mining. The popularity of their graphic cards has only increased, as they account for 46% of their revenue. However, in order not to put all their eggs in one basket, the management and shareholders have product diversification high on their agenda. The company is trying to promote its technology and reach into other markets, such as the automotive sector. Automakers are investing heavily in autonomous driving and looking for solutions for advanced entertainment and information systems. Major players like Mercedes-Benz, NIO and Volvo Cars have already partnered with NVIDIA.

NVIDIA is also collaborating with companies developing sensors for self-driving cars. The goal is to bring a complete self-driving system to the market in 2024 that car manufacturers can integrate into their vehicles. Previously, NVIDIA only provided chips and software. With the new strategy, the company is following the example of competitors Intel and Qualcomm, who already sell complete systems with chips, software and sensors to the automotive sector.

In addition to developing chips for self-driving cars and artificial intelligence, the company is also making inroads into the data centre chip market. Intel used to dominate this market, but its market share has declined in recent years. NVIDIA and AMD, on the other hand, have been making headway in the sector and gaining market share. The chipmaker is also making strides with software and tools that allow software developers to build a metaverse of virtual 3D worlds. NVIDIA's Omniverse Enterprise Platform enables 3D design teams to collaborate in a shared virtual space.

Virtual worlds are not only interesting for gaming applications but also for professional and industrial purposes. For example, the Swedish company Ericsson uses Omniverse to create a digital twin of a city, which is used for testing mobile phone signals. NVIDIA also has ambitious plans, as they aim to create a digital version of the Earth to simulate and predict climate change. Analysts expect the market for software for creating virtual worlds to grow rapidly.

NVIDIA dividend

NVIDIA pays a dividend four times a year. Investors are typically attracted to NVIDIA not for the dividend but for the favourable profit growth expectations.

History of NVIDIA

NVIDIA was founded in April 1993 by Jen-Hsun 'Jensen' Huang, Chris Malachowsky and Curtis Priem. The company is based in Santa Clara, US. Jensen Huang is the figurehead of the company. Since its inception, the Taiwanese-American billionaire has been the CEO and Chairman of the Board. The company gained prominence with their powerful chips (also known as semiconductors or microchips) for gaming consoles. The adoption of their chips and the technological advancements in the industry, allowed the gaming sector to develop into the most popular segment within the broader leisure industry.

In 1999, NVIDIA developed the graphics processing unit (GPU), a specialised processor for handling graphic data. It is used not only in gaming consoles but also in smartphones, PCs, cars, servers and supercomputers. More recently, NVIDIA has focused on developing chips for artificial intelligence. The GPU acts as the 'brain' of computers, robots, and self-driving cars, observing and understanding the world.

Failed power play

In 2020, NVIDIA caused a stir in the chip sector by announcing their plans to acquire the British chip designer ARM. This would have given the company access to innovative and high-quality technology that is essential for almost all major technology companies. The chip designs from ARM are used in Apple's iPhones, Intel's chips and Amazon's cloud servers. As a result, the acquisition plans faced significant resistance from regulators. Combining both companies into one would give them an unfair advantage, regulators feared that they would simply become too dominant in the market. Ultimately, NVIDIA abandoned its takeover plans in early 2022 and cancelled the deal. As a result of the deal falling through, the company paid a $1.2 billion penalty to the owner of ARM, the Japanese investment fund Softbank. Softbank is considering taking ARM public independently.

$1 trillion market cap

On the May 30, 2023, NVIDIA reached a market cap total of over $1 trillion for the first time, briefly joining a few other companies that have a valuation of over $1 trillion, such as Apple, Alphabet, Amazon and Microsoft.