Following a big first-quarter earnings beat, NVIDIA Corporation (NASDAQ: NVDA) held its analyst day event this week, and company management discussed the outlook for all of Nvidia’s business segments. Here’s a breakdown of what they had to say.
Management sees a rapidly-growing $100 billion global gaming market, which includes CPU/GPU in PCs, consoles and mobile devices. While Nvidia is facing tough competition and difficult comps later this year, Canaccord Genuity analyst Matthew Ramsay says unit volume and prices will continue to trend in the right direction for Nvidia. Despite the impressive growth in the gaming division, Pascal penetration remains relatively low among the GeForce installed base.
Management estimates the total addressable datacenter market will grow to around $30 billion by 2020. Ramsay points out even if Nvidia captures only a third of that market, it would still represent a huge growth opportunity.
Management anticipates accelerated adoption of Nvidia’s Drive PX platform. The company is well-positioned to be a major player in the coming autonomous vehicle revolution.
One of the major points of concern for Nvidia bears is how much the company’s aggressive spending will weigh on margins. Chief Financial Officer Colette Kress addressed these concerns, telling analysts management expects both gross and operating margins to expand meaningfully in coming years. Canaccord projects Nvidia can reach 40 percent operating margins by 2020.
Ramsay was certainly impressed by what he saw at analyst day.
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