We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon
Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
The chip-design business is enjoying a “golden age”, declared John Hennessy and David Patterson, two gurus of computer design, earlier this month (Mr Hennessy chairs Alphabet, Google’s parent company). The shift to cloud computing, the rise of specialised computing tasks such as artificial intelligence (ai) and the slow death of Moore’s Law have conspired to create a growing market for “accelerator” chips designed to speed up drastically certain common types of calculation.
One of the standard-bearers for this trend is Nvidia, an American firm that makes graphics-processing units (gpus), customised chips designed to produce the demanding visuals in modern video games. Those chips, it turns out, are also well-suited to the sorts of calculations needed by everything from complex climate simulations to machine learning. Tweaked versions of Nvidia’s gpus can now be found in supercomputers, data-centres and cars. Excitement about such opportunities helped propel the firm’s share price to a peak of $289 in October.
Since then its shares have tumbled. On February 14th the firm reported dire quarterly results. Revenues had fallen by 24% from the same period last year, and profits by 49%. Jensen Huang, Nvidia’s founder and boss, described it as “a turbulent close to what had been a great year”.
Despite its ambitions to diversify, Nvidia still makes most of its $11.7bn of annual revenues from selling chips to gamers (see chart). And it was the firm’s gaming division that posted the biggest slump, with revenue falling by 45% in the latest quarter compared with the year before. Nvidia’s gaming numbers include money it makes from selling gpus to cryptocurrency miners, a bubble that has recently burst. But that is not the whole story.
The firm’s newest “Turing” chips, which support an advanced graphics technique called ray-tracing, have sold slowly. Ray-tracing gives more realistic lighting but requires huge amounts of computing power. For that reason it has not generally been used in games. Only a handful of big titles currently support it. Even without ray-tracing, the chips offer decent performance improvements over the firm’s previous products. But Nvidia’s chips are also generally faster than those from amd, its only significant competitor in gaming, and that has encouraged it to raise prices (Turing graphics cards can cost $1,500). Charging big sums for a modest improvement has, unsurprisingly, proved tough.
Nvidia’s terrible quarter will probably prove to be a blip. The firm expects revenues to recover next year. All but one of the non-gaming divisions grew in 2018. As cloud computing grows and ai becomes more prevalent, demand for Nvidia’s products will increase. But it faces growing competition. Bigger chipmakers such as Intel are eyeing similar markets. Many of Nvidia’s potential clients, including Google and Microsoft, are entering the chip-design business themselves. Facebook announced an ai chip on February 18th. Navigating all that will require much of Mr Huang’s attention. So will keeping his core customers happy.
Nvidia offers bid for Israeli chip firm Mellanox: report
Reuters March 10, 2019
TEL AVIV (Reuters) - Nvidia Corp has submitted an offer to buy Israeli chip designer Mellanox, the Calcalist financial news website said on Sunday.
Nvidia is competing for Mellanox with Intel Corp, which has already offered $6 billion for the Israeli company, Calcalist said. It cited estimates that Nvidia would pay at least 10 percent more than the price offered by Intel.
Nvidia’s advantage is that it would have a greater chance of obtaining U.S. and Chinese regulatory approval as Intel and Mellanox control the market for InfiniBand technology, a networking communications standard commonly used in supercomputers, Calcalist said.
Mellanox, which makes chips and other hardware for data center servers that power cloud computing, said it does not comment on rumors or speculation. Officials at Nvidia could not be reached for comment outside of regular U.S. business hours.
Intel has declined to comment on reports that it is seeking to acquire Mellanox.
Nvidia Corp. is bringing artificial intelligence to the edge of the network with the launch early Monday of its new Nvidia EGX platform that can perceive, understand and act on data in real time without sending it to the cloud or a data center first.
Delivering AI to edge devices such as smartphones, sensors and factory machines is the next step in the technology’s evolutionary progress. The earliest AI algorithms were so complex that they could be processed only on powerful machines running in cloud data centers, and that means sending lots of information across the network. But this is undesirable because it requires lots of bandwidth and results in higher latencies, which makes “real-time” AI something less than that.
What companies really want is AI to be performed where the data itself is created, be it at manufacturing facilities, retail stores or warehouses. And it’s a problem that several tech firms have attempted to address, most recently Intel Corp. with the launch of its first 10-nanometer “Ice Lake” chips today but also dozens of startups.
But Nvidia’s entrance into the AI edge is notable because the company’s graphics processing units are widely regarded as some of the best AI-processing hardware around. That includes its Tesla V100 for deep learning, and its Quadro GV100, which enables ray tracing, the process of creating realistic images, to be done in real time.
The new NVIDIA EGX platform is scalable from a light server based on the Jetson Nano processor that performs 0.5 Trillion operations per second in a few watts, to a micro data center with a rack of NVIDIA T4 based edge servers that can do 10,000 trillion operations per second. The energy-saving capabilities of the chip are important for AI, since traditional hardware is a massive power hog when running such tasks.
In a media briefing, Justin Boitano, senior director of enterprise and edge computing at Nvidia, said there will be huge demand for a platform such as NGX because there will be something like 150 billion machine sensors and “internet of things” devices in the world by 2025. He said many of these sensors would be used for initiatives such as “smart cities,” and will be pumping out data that needs to be processed onsite, for reasons such as a demand for lower latency, real-time response, data sovereignty rules or privacy concerns.
“AI is really the killer application in all industries both in vision and in speech,” Boitano said.
Partnerships are important as well if people are actually going to put those chips to good use. For that reason Nvidia is integrating the NVIDIA Edge Stack software than runs on EGX with Red Hat Inc.’s OpenShift Kubernetes container orchestration platform in order to make it compatible with modern software applications.
The platform also integrates security, storage and networking technologies from Mellanox Technologies Ltd., which is a company that Nvidia intends to acquire by the end of year for a cool $6.9 billion.
“Mellanox Smart NICs and switches provide the ideal I/O connectivity for data access that scale from the edge to hyperscale data centers,” said Mellanox Chief Technology Officer Michael Kagan.
Nvidia is teaming up with no fewer than 13 different server makers to sell the EGX platform, including big-name manufacturers such as Cisco Systems Inc., Dell-EMC, Hewlett Packard Enterprise Co. and Lenovo Group Holding Ltd.
NGX is also compatible with AI applications running on major cloud infrastructure services such as Amazon Web Services and Microsoft Azure, and can connect to IoT services such as AWS IoT Greengrass and Azure IoT Edge.
Nvidia stock rose as much as 7% on Thursday after hours, after the company reported better-than-expected fiscal-second quarter earnings.
Here’s what the company reported:
Earnings: $1.24 per share, excluding certain items, vs. $1.15 per share as expected by analysts, according to Refinitiv.
Revenue: $2.58 billion, vs. $2.54 billion as expected by analysts, according to Refinitiv.
Nvidia’s revenue fell 17% on an annualized basis in the quarter, which ended on July 28, according to a statement.
Nvidia’s biggest segment, gaming, produced $1.31 billion in venue, down 27% on an annualized basis and just above the $1.30 billion consensus estimate among analysts surveyed by FactSet. Nvidia saw fewer shipments of graphics cards for desktop PCs and system-on-chip components for gaming systems.
The company’s data center segment came in with $655 million in revenue. That’s down 14% on an annualized basis and a bit less than the $668.5 million FactSet consensus. Nvidia cited a decline in revenue from “hyperscale” customers like cloud infrastructure providers. “While sales for internal hyperscale use were muted, the engineering focus on AI is growing,” Nvidia’s chief financial officer, Colette Kress, said on a conference call with analysts on Thursday.
With respect to guidance, Nvidia says that in the fiscal third quarter it expects $2.90 billion in revenue, plus or minus 2%. That would represent a roughly 9% annualized decline, and it’s below the $2.97 billion consensus estimate among analysts polled by Refinitiv.
Nvidia said it estimates gross margin in the fiscal third quarter to be 62.5%, plus or minus 50 basis points; analysts polled by FactSet had been looking for 60.2%.
Prior to earnings, shares of Nvidia had risen 11% since the start of 2019. In the fiscal second quarter Nvidia announced GeForce RTX Super graphics cards for gaming.
In the past few quarters, Nvidia’s results were impacted by supply issues. In a Tuesday note Matt Bryson of Wedbush Securities told clients that there are reasons to be optimistic about a return to normalcy in the second half of 2019. He pointed to pickup of Nintendo products containing Nvidia components and the introduction of the Nintendo Switch Lite console.
“Our meeting with [PC maker] Maingear indicated NVDA continues to dominate the high end/custom PC GPU market and is holding share vs. AMD, ” wrote Bryson, who has an outperform rating on Nvidia stock.
“Essentially our business is normalized,” Kress said.
Amazon Brings AI Performance to the Cloud with NVIDIA T4 GPUs blogs.nvidia.com AWS EC2 G4 instances feature highly efficient Turing architecture processors to deploy accelerated hyperscale AI inference, cloud gaming and the latest RTX graphics.
Nvidia beat on the top and bottom lines, but quarterly revenue guidance was below expectations.
The company’s revenue has now declined four quarters in a row.
Nvidia shares seesawed in extended trading on Thursday after the company issued better-than-expected fiscal third-quarter results and slightly soft quarterly guidance.
Here’s how the company did:
Earnings: Excluding certain items, $1.78 per share, vs. $1.57 per share as expected by analysts, according to Refinitiv.
Revenue: $3.01 billion, vs. $2.91 billion as expected by analysts, according to Refinitiv.
Nvidia’s revenue fell 5% from a year ago in the quarter, which ended on October 27, according to a statement. The company sold inventory that it had previously written off in the quarter, but revenue has now declined four quarters in a row on an annualized basis.
Nvidia’s largest business segment, Gaming, shrunk 6% year-over-year at $1.66 billion in quarterly revenue, which is above the $1.54 billion consensus among analysts polled by FactSet.
The company Data Center business delivered $726 million in revenue, less than the $754.2 million FactSet consensus estimate. The Professional Visualization segment came up with revenue of $324 million, higher than the $315.4 million estimate.
In the fiscal third quarter Nvidia announced new GeForce Super graphics processing units for gaming and a new kind of Microsoft Azure Data Box Edge hardware product containing its T4 GPUs.
In terms of guidance, Nvidia said it expects $2.95 billion in revenue, plus or minus 2%, for the fiscal fourth quarter, which implies a nearly 34% increase. But analysts polled by Refinitiv had expected $3.06 billion in fiscal fourth-quarter revenue.
The company believes the Data Center business will post a sequential improvement in the fiscal fourth quarter. Nvidia’s forecast doesn’t include the impact from Mellanox, a $6.9 billion acquisition that has not yet closed.
Nvidia is calling for $805 million in operating expenses in the fiscal fourth quarter, excluding certain items, more than the FactSet estimate of $768 million.
In the past year Nvidia has dealt with numerous issues, including the disappearance in revenue from selling cards for mining cryptocurrencies and a pause in spending from companies that operate hefty data centers, and they’ve hurt the company’s track record of surpassing expectations, Deutsche Bank analysts led by Ross Seymore wrote in a note distributed to clients on Sunday.
The analysts, who have a hold rating on Nvidia, said it was likely the company would achieve “positive follow-through” in its Data Center segment in the fiscal fourth quarter, although the Gaming business would have a tougher sequential revenue comparison, partly because of negative seasonality effects from Nintendo Switch console sales.
Nvidia stock has risen 57% since the start of 2019.
Nvidia Stock Is Gaining After a Morgan Stanley Upgrade. Here's What the Analyst Sees. -- Barrons.com DOW JONES & COMPANY, INC. 8:08 AM ET 11/25/2019
Symbol Last Price Change
QUOTES AS OF 04:15:00 PM ET 11/22/2019
Nvidia (NVDA) stock is trading higher early Monday after Morgan Stanley semiconductor analyst Joseph Moore upped his rating on the chipmaker to Overweight from Equal Weight, with a new price target of $259, from $217, citing improving sales prospects for both gaming and data center applications.
"Both gaming and data center fell short of expectations over the course of 2019, and we were surprised at how well the stock was doing in light of that," Moore writes in a research note. "But the stock has not meaningfully outperformed the robust semiconductor group, and as we look into 2020, we see catalysts for Nvidia's(NVDA) growth accelerating on nearly every vector, even in what we expect will be a tough semiconductor environment -- ray tracing software support should generate more gamer enthusiasm in gaming products, and new data center workloads around conversational AI should lead to another leg of data center growth."
Moore concedes that the stock is pricey on near-term earnings, and says he had held back on turning more bullish on the theory that January quarter consensus estimates were too high -- but adds that the observation while accurate " didn't give us the pullback/entry point that we had hoped for."
The analyst writes that he sees "upside from here." Concludes Moore: "All semiconductor stocks are at a premium multiple on 2020 earnings, but across the group we see Nvidia(NVDA) as having one of the best opportunities to maintain a high multiple as we shift to 2021."
The analyst expects 18% growth in the company's gaming business in 2020 after "an investment year" in 2019, with " double digit potential growth thereafter."
In the data center, he sees Nvidia's(NVDA) business roughly doubling over the next three years, as investment increased in machine learning and artificial intelligence applications.
"The company remains nearly unchallenged in its key [machine learning] training market, maintains high market share in emerging areas such as inference, and is leading the way in new growth opportunities such as traditional machine learning analytics," he writes.
NVDA early Monday is up 2.5%, to $216.23, while S&P 500 futures have advanced 0.2%, Dow Jones Industrial Average futures have risen 0.2%, and Nasdaq Composite futures have gained 0.3%.
Write to Eric J. Savitz at firstname.lastname@example.org