The eye-catching third-quarter earnings report is only the short-term and medium-term logic of NVIDIA's stock price, and its future growth point lies in the "meta-universe infrastructure" effect.
After the third quarter financial report came out, NVIDIA's "god leader" Huang Jenxun once again stood tall. The stock price commended him not only because he made money, but also stepped on the outlet of the meta-universe.
NVIDIA (NVDA. US) shares are up nearly 40 percent over the past month and are up nearly 130 percent this year, at an all-time high. Analysts have been raising their left, right and middle price targets this month, but that's not just because of the revenue good news from the earnings report.
Barron's pointed out: "It is a critical moment for Nvidia to make a profit, because its real driving force is the metacosm, and NVIDIA wants to be the core of the metacosmonic construction." Earlier this month, Nvidia launched a corresponding virtual collaboration platform, software and tools. And all the excitement in the market led to another carnival of NVIDIA's stock price. ”
The "cash cow" takes off with games and AI computing power: revenue, profit, and guidance
On November 17, US Eastern Time, chip giant Nvidia released the third quarter of fiscal 2022 financial report, so far its performance has climbed for six consecutive quarters beyond expectations, the rally is high, the total revenue reached 7.1 billion US dollars, higher than the analysts expected of 6.81 billion US dollars, an increase of 9% over the previous quarter, higher than the same period last year 50%, in the lack of core and raw material costs in the external environment, the net profit did not fall but rose, the year-on-year increase reached 84%.
After the release of the third-quarter earnings report, the market is also optimistic about its fourth-quarter guidance, with fourth-quarter revenue expected to be $7.40 billion±2.0%, higher than analysts had previously expected $6.86 billion. As soon as the earnings news came out, NVIDIA's after-hours stock price rose nearly 5%, and then fell back to $292.61 / share.
From the perspective of business division, this latest financial report, NVIDIA's data center, game and professional visualization market platform revenue have reached a new high. Among them, thanks to GPU sales from super-large-scale customers, the data center business revenue rose to a new high, surging 55% year-on-year to $2.94 billion, exceeding the previous revenue forecast of $2.69 billion; another "cash cow" game business exceeded the same period last year with a total revenue of $3.22 billion. Previously, according to market analysis statistics, 80% of the world's PC game users have not yet upgraded their graphics cards to the latest RTX series, which also means that NVIDIA, as the industry hegemon in the field of graphics cards, has a huge blue ocean market in this new business area that can continue to expand.
Nvidia CEO Jensen Huang said in his interpretation of the earnings report: Nvidia's performance hit a new high in the third quarter, mainly due to the super-scale and cloud expansion, more than 25,000 companies expanded the scope of adoption of NVIDIA artificial intelligence technology, and the demand surged. NVIDIA RTX has reshaped the computer graphics industry through AI and ray tracing, making it an ideal upgrade for the huge game creation market, designers, professionals, and gamers.
The number one player in the "new infrastructure" of the meta-universe world? Nvidia entered key growth points
The market is generally optimistic that after the concept hype, NVIDIA is expected to become a key player in actually promoting the construction of meta-universe infrastructure.
Barron's noted that as investors' eyes are no longer limited to Facebook founder Mark Zuckerberg's corporate name change and business updates, they are looking for the next wave of key change opportunities around the metaverse, such as those that will benefit from the transformation of the interactive 3D virtual world. Nvidia has always been an obvious choice because its graphics card can power the visuals of the metaverse.
Moreover, NVIDIA's image vision technology can also provide assistance for the value extension of other industries in the metaverse world. For example, Barron's quoted Morgan Stanley analysts as saying that metacosmity will also form a $57 billion segment for the luxury industry in the future, selling their virtual wear products for users to wear in this new virtual world.
Previously, on November 9, Nvidia GTC 2021, announced that it would upgrade the product route to the "GPU + CPU + DPU" and "three-core" strategy, and positioned its newly released "Omniverse" platform as "Engineer's Metacosm", dedicated to building a real-time simulation and collaboration platform for virtual collaboration, wells Fargo analysts wrote earlier this month: As many as 20 million designers and engineers around the world may turn to Omniverse. They see Nvidia as "an enabler/platform for developing metaversics across a variety of vertical applications."
CEO Jensen Huang said in the earnings reading: "Omniverse will be used for collaborative design, customer service and video conferencing, extending from the factory to the digital twin of the entire city. This open collaboration platform brings together NVIDIA's expertise in artificial intelligence, simulation, graphics and computing infrastructure. This is the tip of the iceberg of the upcoming story. ”
A few days ago, Time magazine awarded NVIDIA Omniverse the 2021 Best Invention Award, rating that "such virtual worlds are not just built for games — they are also helpful for the planning of infrastructure such as roads, buildings, and can be used to test self-driving cars." The platform combines ray tracing technology from the latest NVIDIA GPUs with a range of open source tools to help achieve real-world goals and make the creative process easier. For example, architectural experts such as Foster Architects are using the technology to visualize architectural details at an earlier design stage; BMW has used it to build a digital twin of a factory to test the possibility of a more efficient assembly line."
Under the "lack of core war", NVIDIA's acquisition of ARM did not affect the stock price
Another focus on NVIDIA is the progress of its acquisition of chip designer ARM. Due to massive regulatory resistance, Nvidia's acquisition plan appears to have encountered a series of troubles, but it has not affected the basic market of its stock price rally.
The deal for ARM totals $40 billion and was initially expected to close by March 2022. In a report on Wednesday, an investment bank analyst stressed that the acquisition of ARM would give Nvidia a "strategic upside option."
Regulators in several countries and regions, including the United States, the United Kingdom and the European Union, have expressed concern about the cross-border chip industry acquisition plan. According to the Sunday Times, on November 16, the United Kingdom updated the first phase of the investigation into Nvidia's acquisition of ARM and announced that it would launch a second phase of investigation into the acquisition on the grounds of "competition and national security", which is expected to last 24 weeks. When asked by Barron's, the relevant British government department declined to comment on more details.
After the news broke, the stock fell only slightly, and then rebounded sharply. Matt Bryson, an analyst at broker and investment bank Wedbush Securities, said in a note on Friday: "Any concerns about the completion of the ARM acquisition appear to have little impact on the stock." ”
Nvidia Chief Financial Officer Colette Kress said in a latest november 18 that the company will continue its plans to acquire ARM. "The acquisition of ARM is a huge opportunity for both the industry and our customers, and we can help ARM expand its intellectual property." In a recent interview with the media, Huang Jenxun said: "Whether or not we can have ARM, NVIDIA is ready to continue to move forward and will continue to succeed no matter what." ”
Text | Chinese edition of Barron's edition by Sun Yixi
Edit | Peng Ren
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