Do Nvidia’s New Competitors Pose a Threat?

Nvidia’s New Competitors

This article was written by Moe Chabot, a Financial Analyst at I Know First.







  • Nvidia’s Q2 FY2019 was outstanding showing great growth in Gaming, Professional Visualization, and Data center
  • The rise in GPU sales from Gaming, Professional Visualization, and Data center offset the sudden drop in cryptocurrency GPU sales
  • Tesla recently terminated use of Nvidia’s self-driving car platform
  • Huawei a Chinese tech company released an AI chip to compete with Nvidia’s Data center business


NVIDIA Corp. (NASDAQ: NVDA)  is the leading designer of state of the art GPU’s used in a multitude of fields such as Gaming, Datacenters, Self-driving cars, and professional visualization. Currently NVidias main source of income is their gaming sector, making up around 58% of their total profit, however the other parts of the company seem to have a bright future ahead of them, and will slowly become a larger part of the company.


Nvidia’s main current source of income is their gaming GPU department, which currently makes up 58% of their total revenue. In the second quarter Nvidias gaming department total revenue rose 52% from the previous year to 1.8 billion, this growth was fueled by Pasca-based GPUs used in desktops as well as in high-performance notebooks. Another reason their gaming division increased so much was due to the sales of the Nintendo switch which implement Nvidia’s Tegra Processor.

Nvidia’s Data-Centers

NVidias Data centers have seen transduce growth from a year ago, the revenue generated from the data center increased 83% to $760 million. This increase is mainly due to strong sales in their Volta architecture products, including NVIDIA Tesla V100 and DGX systems.

Some of the key developments in the data center sector are AI Developments, Tensor Core GPU, and DGX. Some AI developments include different real-time services such as fraud detection, voice recognition, voice synthesis, and translation. Volta NVidia’s Tensor core GPU has been adopted by many cloud providers and data centers, for example, it is used on the Google Cloud. Lastly, DGX systems are used to make the job of a data-scientists more efficient and make it easier to train and implement powerful machine learning techniques.


Professional Visualization

Professional Visualization revenues reached $281 million up 20% from the previous year. The rise in Professional Visualization division is mostly due to the rise in popularity of VR (virtual reality). There are two main uses for VR currently, one gaming, and two cinema. It is used in gaming to make the player feel like he is actually in the game and to make the player feel the experience in his/her experience high-quality visualizations are needed. Just like in gaming VR in for cinema is also used to make the audience feel like they are in the movie. While Professional Visualization might only be 9% of the total revenue this division has a lot of room to grow, and will as VR gets more and more popular


Automotive revenue is up 13% from last year this growth is because of the DRIVE™ PX platforms, and development agreements with automotive companies. This part of the company will only grow as self-driving cars become more and more common. According to a study made by  Allied Market Research the autonomous vehicle market will be worth 54.23 billion in 2019 and increase to 556.67 billion in 2026, this is a 10X growth in less than 10 years. Nvidia currently provides AI computing platforms for over 370 companies working on self-driving cars, some of the more notable companies include Volkswagen, Volvo, Mercedes-Bens, Audi, and many more.

OEM and IP

OEM and IP have declined 54% from last year due to the fact that the less and fewer people are mining cryptocurrencies. As a result of the cryptocurrency crash, NVidia is projecting no contributions going forward from the cryptocurrency market.

Bitcoin from Oct 7, 2017 – Oct 7, 2018  (source: Coindesk)



(source: Wikimedia)


Tesla’s Self-Driving Car Platform

In Tesla’s last earnings call Elon Musk started that Tesla will be swapping in their own self-driving platform known as Hardware 3 into the Model S, X, and 3 instead of Nvidia’s Drive platform. The main reason Tesla is doing this is that they believe if they build it in house they would be able to focus on their own needs and this way make it more efficient. For example, of how much more efficient Tesla’s self-driving car platform is compared to Nvidia’s, according to Elon Musk, Nvidia’s hardware was handling 200 frames per second which is much less than the 2,000 frames per second Tesla’s specialized chip was able to do. The main concern for Nvidia should be that many other companies may follow Tesla and try and build their own self-driving car platforms better suited for their cars.

Nvidia & Volvo

To try and ensure other companies don’t make their own driving platform like Tesla Nvidia introduced NVIDIA DRIVE AGX Developer kit. This kit allows companies to have more flexibility in creating the best hardware configuration for their software. One company to recently implement Nvidia’s Drive AGX kit is Volvo Cars, Volvo plans on using this new platform on their new Scalable Product Architecture 2 vehicle platform (SPA 2). Volvo will use Nvidia’s AI technology for implementing advanced driver support systems, energy management technology and in-car personalization options.

(source: Wikimedia- Gotebord)


Huawei Data-Center

Huawei is a Chinese telecommunications equipment company that generated around $96 Billion in 2017, they are currently involved in the telecom network, IT, smart devices, and now data-center fields. Huawei recently announced a new AI chip the Ascend 910, this product’s main target market is the Data-center market. Huawei claims that their new chip process more data in a shorter period than its competitors (Nvidia), and makes it possible to train networks in a matter of minutes. In 2017 the Data center business made up 9% of Huawei’s revenue, and grow about 35% Y/Y, Huawei believes this new chip (Ascend 910) will propel them forward in this market and continue outputting strong growth.

(source: Wikimedia)


Nvidia’s Response

While Huawei new chip looks promising, it is not tested to work like Nvidia’s chips are. Five out of the world’s fastest supercomputers are powered by Nvidia’s GPUs according to world’s 500 fastest systems, however, Nvidia does not only support the best of the best computers they also support 56% of the rest of the systems on the list above. Another issue with Huawei is that they are based in China, and currently the United States is accusing China of putting spyware in many products, and do to this many American companies will probably not want to use a chip that might steal some of their most valuable information.


Tesla and Huawei currently do not pose a threat to Nvidia as long as Nvidia keeps on improving and does not slow down. I agree with the I Know First AI algorithm and say NVDA is a buy because while the cryptocurrency market is down their other divisions are doing really well and most likely will continue into the distant future.

Current I Know First Algorithm Bullish Forecast for NVDA

I Know First’s algorithm mirrors my bullish outlook on NVDA in the long term

How to read the I Know First Forecast and Heatmap

Past I Know First Success with NVIDIA

I Know First has been bullish for the 1-year period on NVDA shares in past forecasts.

On September 24th, an I Know First Analyst released a bullish article for NVDA.

(Source: Yahoo Finance)

NVDA has risen 55.38% versus the S&P 500 that only rose 16.78%