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NVIDIA s (NASDAQ: NVDA) GPUs are the core of the chipmaker’s accelerated computing products. They bring market-leading performance and energy efficiency to various industries, from graphics and design to data science and artificial intelligence. The company recently released its latest GPU architecture, Ampere, which is two to 20 times faster than previous generations. Here’s how this new technology could help NVIDIA grow its gaming and data center businesses.
New graphics cards
In September 2020, NVIDIA announced its Ampere-based GeForce RTX 30 series graphics cards, which offer twice the performance and power efficiency of its previous Turing-based products. For gamers, these graphics cards bring super-realistic ray tracing lighting, plus other enhancements, to popular titles like Fortnite and Cyberpunk 2077.
Image Source: NVIDIA
At the higher end, the RTX 3090 is the best performing graphics card on the market, outperforming AMD (NASDAQ: AMD) RX 6900 XT recently launched. At the low end, the NVIDIA RTX 3060 Ti is faster and cheaper than NVIDIA’s fastest graphics card from the previous generation. It almost matches the performance of AMD’s low-end product, the RX 6800, but is priced at just $ 399 compared to AMD’s $ 579.
Management has already reported strong demand for the new graphics cards, indicating that many retailers sold out instantly. This helped boost NVIDIA’s gaming revenue by 37% in the third quarter of fiscal 2021. But NVIDIA has more than 200 million gamers on its computing platform, and the company owns 80% of the discrete GPU market for PC; That dominance, along with the growth of the gaming industry in general, should drive strong sales for many quarters to come.
A new cutting edge computing platform
In May 2019, NVIDIA announced the EGX edge AI platform, which includes hardware and software to support AI at the edge of the network (the part of a network close to where data is generated). NVIDIA recently expanded the EGX platform to include the EGX Converged Accelerator, a product that combines its Ampere GPUs with Mellanox BlueField-2 DPUs.
NVIDIA GPUs (Graphics Processing Units) are good at processing a lot of data very quickly, making them ideal for computationally intensive tasks such as data analysis or artificial intelligence. But NVIDIA’s latest Ampere architecture takes GPU performance to another level, delivering AI performance up to 20 times faster than the previous Volta architecture. Additionally, Mellanox BlueField-2 DPUs (Data Processing Units) combine the capabilities of network adapters (connecting servers to a network) with data processing power equivalent to 125 CPUs. This means that DPUs can offload work that would normally be done to server CPUs, allowing those CPUs to focus on running applications, making edge data centers faster, more efficient, and more secure.
Bringing it all together, NVIDIA EGX Converged Accelerator Servers enable enterprises to bring real-time and secure artificial intelligence to the edge, helping to support the growing number of IoT devices and sensors in a variety of industries, from robotics and retail to healthcare. and smart cities.
NVIDIA is already seeing the adoption of its EGX edge AI platform by some of the world’s largest technology companies, including major server manufacturers such as Dell, Inspurand Lenovo, as well as software providers, such as Red Hat and VMware. This should help NVIDIA capture a sizable chunk of the artificial intelligence market, an opportunity that management believes will reach $ 15 billion by 2024.
A final word
Investors should pay attention to NVIDIA’s revenue growth in its gaming and data center segments to see if these products move the needle. NVIDIA shares enjoy a relatively expensive valuation, trading at 22 times sales compared to 13 times AMD sales. (To be fair, NVIDIA’s higher earnings mean it trades at a lower P / E than AMD, still a high profit of 85 times AMD’s 124). As a result, any failure to deliver strong results could cause volatility in NVIDIA’s share price.
Yet the NVIDIA brand has become synonymous with high-performance, cutting-edge computing. That advantage, combined with the company’s strong leadership and culture of innovation, has helped NVIDIA achieve strong revenue and bottom line growth in recent years. NVIDIA’s revenue increased 204% and profits increased 537% in the last five years. Thanks to these new Ampere-based products, that powerful growth should continue into the future.
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