Thursday, December 22, 2016

NVIDIA Feature: Once Upon A Time In Silicon Valley (NVDA)

We've been beating this drum since the stock was in the 20's, usually with this disclaimer:
We are fans.
Before we go any further, our NVIDIA boilerplate: we make very few calls on individual names on the blog but this one is special.

They are positioned to be the brains in autonomous vehicles, they will drive virtual reality should it ever catch on, the current businesses include gaming graphics, deep learning/artificial intelligence, and supercharging the world's fastest supercomputers including what will be the world's fastest at Oak Ridge next year.
Not just another pretty face.

Or food delivery app.
During this time, I've known our readers are busy and are smart enough and curious enough to go digging if they're interested, so we don't do the 40 page investment thesis stuff. Anyway, I hate those things.
This piece from Bloomberg is pretty good background.

With one more caveat.
Long ain't wrong but in this type of investing, cutting edge technology, priced for perfection etc. you had better be prepared for a 20% decline at any time.

If you can't handle that, look for other opportunities, sleep is too valuable to give up for something where you get to determine the locus of control.

From Bloomberg: 

Nvidia Surges in 2016 Using Graphics Chips to Challenge Intel
  • CEO Huang’s evangelism is paying off, boosting earnings
  • Data-center operators, automakers turning to PC-gaming part
When Paulina Sliwinska, a fund manager at Edinburgh-based Baillie Gifford & Co., made the trip to Silicon Valley looking for the next big thing in technology, she found it -- not in a hot startup run by a 23-year-old whiz kid just out of Stanford, but in a 23-year-old semiconductor maker that’s had the same chief executive officer since its founding.

Jen-Hsun Huang, CEO of graphics-chip maker Nvidia Corp., has won over Sliwinska and many other investors this year with claims that his products, once confined to the niche of computer-gaming machines, are breaking out to become key components of nascent technologies from voice recognition to self-driving cars.

“He’s so engaging,” said Sliwinska. “Even from this point the opportunities in front of it over the next 10 years are astonishing.” After she met Huang in August, the fund added to its position and is now the 10th-largest holder. The company is the best performer on the Nasdaq 100 Stock Index this year, outpacing the No. 2 stock by a multiple of almost three.

Under Huang, Nvidia has built itself into the leading supplier of graphics processors, the chips that deliver the ever-more-realistic images that make computer games so immersive and addictive. For most of its history, that’s been a relatively small market, with the much bigger businesses of computer processors and smartphone chips dominated by Intel Corp. and Qualcomm Inc.

This year, though, Huang’s longtime belief that the fundamental advantages of his graphics chips would give them a broader role in fast-growing fields such as artificial intelligence and self-driving cars has begun to pay off -- and is buoying Nvidia’s earnings. In the third quarter, demand for chips used in data centers and cars helped fuel a 54 percent surge in sales, and profit doubled to a record.

That performance was the result of years of investment in the hardware and software aimed at enabling computers and cars to think for themselves, according to Huang. The stock surged 30 percent on Nov. 11, the day after the earnings report. Yet there was no victory lap from the CEO -- his company is going to battle in markets also targeted by famously fierce rivals Intel, whose annual R&D spending is twice Nvidia’s revenue, and Qualcomm, which has the largest cash balance in the chip industry.

“The only thing we can guarantee is the velocity with which we innovate,” Huang said in an interview at the time. Nvidia declined to make Huang available for comment for this story.

Huang, 53, runs Nvidia like it’s still a startup, making snap decisions and demanding fast execution, according to those who have worked for him. For a semiconductor maker, that’s no small feat: Designing a chip, getting it ready for market and then having it manufactured can take years and costs hundreds of millions of dollars. Chip companies publish road maps that reflect those intricate details, and they build their organizations around it. Decisions on what to make in multibillion-dollar plants requires extensive planning....MUCH MORE
Here's our first NVIDIA post, Sunday May 17, 2015:

Nvidia Wants to Be the Brains Of Your Autonomous Car (NVDA)
We've mentioned, usually in the context of the Top 500* fastest supercomputers, that:
Long time readers know we have a serious interest in screaming fast computers and try to get to the Top500 list a couple times a year. Here is a computer that was at the top of that list, the fastest computer in the world just four years ago. And it's being shut down.
Technology changes pretty fast. 
That was from a 2013 post.

Among the fastest processors in the business are the one's originally developed for video games and known as Graphics Processing Units or GPU's. Since Nvidia released their Tesla hardware in 2008 hobbyists (and others) have used GPU's to build personal supercomputers.
Here's Nvidias Build your Own page.
Or have your tech guy build one for you.

In addition Nvidia has very fast connectors they call NVLink.
Using a hybrid combination of IBM Central Processing Units (CPU's) and Nvidia's GPU's, all hooked together with the NVLink, Oak Ridge National Laboratory is building what will be the world's fastest supercomputer when it debuts in 2018.

As your kid plays Grand Theft Auto.

From IEEE Spectrum, April 9, 2015:

Nvidia Wants to Build the Robocar's Brain...
The stock had closed the previous Friday at $21.30.
$107.81 last, up $1.98 (+1.87%). Daily and all-time top-tick $108.87.

If interested, here's the Google search of the blog for the rest of our posts: NVIDIA