Nvidia Stock Forecast: NVDA Remains On Solid Ground

 The article was written by Aline Rzetelna, a Financial Analyst at I Know First

Nvidia Stock Forecast: 


  • NVDA’s Growth Plan
  • New Rivals in the Autonomous Vehicle War
  • I Know First Bullish Forecast for NVDA

Founded in 1993, by Jensen Huang, Chris Malachowsky and Curtis Priem, Nvidia operates as a visual computing company worldwide. It is a specialized platform company that targets four large markets: Gaming, Professional Visualization, Datacenter and Automotive. The company designs graphics processing units (GPUs) and Tegra Processor to address their four large markets. The GPU segment offers processors, which include GeForce for gamers, Quadro for designers, Tesla for researchers and analysts focused on artificial intelligence, deep learning and big-data, and GRID for cloud-based visual computing users. The Tegra brand integrates an entire computer onto a single chip, incorporating GPUs and multi-core CPUs aimed at online gaming and entertainment devices, autonomous robots, drones and cars.

NVIDIA: Growing Ecosystem and Partner Base

Nvidia’s GPU computer model based on Deep Learning and Artificial Intelligence has proven to be unbelievably extraordinary for computer science. Artificial intelligence is the act where computers simulate human intelligence, acting as a brain for computers, robots and self-driving cars. Nvidias’ GPU is the most pervasive, accessible, energy-efficient path for HPC and data centers. It powers the fastest supercomputers in the U.S. and Europe, it defines modern computer graphics and it has developed the world’s large gaming platform. Most of all, Nvidia GPU’s importance is due to its role as the brain of the intelligent industrial revolution, while it is working with the world’s largest enterprise technology providers in order to make AI available to every company.

Despite all the growing competition in the AI sector, NVDA is still firmly in the driver’s seat of this industry, investing in product development and working hard to grow its ecosystem and partner base. At the Beijing developers conference, the company made some announcements that highlighted its lead in the deep learning market.

First of all, Nvidia made a deal with major Chinese tech companies Alibaba Cloud, Baidu and Tencent. It will provide artificial intelligence GPU accelerators to the data centers and cloud-service infrastructures at those giants. The deal consists of a shift from NVIDIA’s Pascal architecture-based systems to Volta-based platforms, which offer greater speed and scalability for AI inferencing and training.

Moreover, Nvidia is providing the NVIDIA HGX Volta-based accelerated systems for hyperscale data centers in China’s leading original equipment manufactures, including Inspur, Lenovo and Huawei. Nvidia is also teaming with Tencent and Leadtek to set up Chinese AI training centers. Furthermore, Chinese e-commerce JD.com is using Nvidia’s Jetson platform for embedded systems to power autonomous delivery drones and robots.

Regarding the autonomous driving war, Nvidia has created a platform called Drive, to address every aspect of autonomous vehicles. The company has also created Xavier, the AI supercomputer, designed for use in self-driving cars. Finally, the company released the third version of its inference optimization and runtime software for Tesla GPUs, TensoRT 3, which will boost the performance and slash the cost of inferencing from the cloud to edge devices, such as self-driving cars and robots.

Is the Autonomous Vehicles War Going to Overthrow Nvidia?

Nvidia has seen its stock price rise over sixfold in the past two years due to its rising business with car makers. About 6 percent of NVDA’s total revenue comes from automotive sales.

Tesla electric cars have always had Nvidia hardware powering their information and entertainment system and the giant touchscreen that controls it. According to recent rumors, Tesla is switching from Nvidia to Intel as the chip supplier of the giant infotainment screens in Tesla cars. Intel, the world’s largest chipmaker, also supplies chip for Alphabet’s Waymo autonomous car project.

Despite this change, Nvidia and Tesla have been working together on self-driving cars for years and NVDA has already established its crucial role in this market. Thus, even if this threat has a significant impact on NVDA’s stock price, their position in the market remains on solid ground. This can be seen in the chart below, where NVDA 2017 revenue growth estimates and year-to-date stock price performance is still comfortably ahead of Intel’s.

(Source: Bloomberg, NASDAQ and Market Realist)

I Know First Bullish Forecast for NVDA

Artificial Intelligence is still the wave of the future, where autonomous driving cars represents a significant new era of innovation for the world. Thus, despite the recent negative headlines, NVDA’s huge contribution on this market does not change. As a result, we can still consider NVIDIA as a king for the growth and development not only of AI, but specially of the autonomous vehicle market. In accordance with the I Know First bullish forecast, I rate NVDA as a buy, since it is still focusing in growing its ecosystem and partner base.

I Know First Past Success with NVDA

I Know First has been bullish for the 1-year period on NVDA shares in past forecasts. On October 12th, 2016, an I Know First Analyst released a bullish article for NVDA. According to that article, Tesla’s decision to use Nvidia’s deep learning platform for its autonomous car project would attract buy-side investors and, thus, increase Nvidia’s stock. Since the forecast’s release, NVDA shares have gained 170.33%. See chart below.

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. This allows users to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.

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