Nvidia (NASDAQ 🙂 is the dominant company in graphics processing units for data centers and consumers. Nvidia’s gaming segment accounts for almost half of its $6.5 billion quarterly revenue.

This company’s stock is trading at 10.2% discount to its 52-week high of $230.43. (See Analysts’ Top Stocks on TipRanks)

Growing Market Share

According to the most recent Jon Peddie Research Report, Nvidia grew its market share in discrete GPUs by 83% during Q2 2021.

Advanced Micro Devices’ GPU share fell to 17% (NASDAQ:). Nvidia is pleased with this market share increase. Nvidia’s add-in or discrete GPU business generates $11.6 billion each quarter.

Nvidia’s gaming business generated $3.1 million in Q2. It is estimated that the PC gaming and computer graphics hardware industries are worth $36 million. Nvidia’s overwhelming 83% market share protects its high 32.3% net income margin.

Nvidia has branded the top gaming GPUs. GeForce GPUs are beloved by gamers so much that Nvidia GeForce RTX3070 V2 (Asus brand) is still highly sought-after at $1,599

Windows 11 offers a strong market for discrete GPUs. For gaming or content creation, new Windows 11 desktop computers and laptops that comply with TPM 2.0 will require discrete graphics cards.

No Threat from Intel’s GPUs

Intel might challenge Nvidia’s gaming GPU leader position (NASDAQ:). On the other hand, Intel’s ARC Alchemist gaming GPUs will probably only start shipping by Q2 2022.

The future of Intel’s comeback greatly depends on TSMC’s (TSM) extra 6-nanometer production capacity. Intel, like Nvidia has outsourced the production of its ARC Alchemist GPUs to TSMC.

It will take many years before PC gamers and content creators start trusting Intel ARC GPUs over Nvidia’s GeForce RTX.

Data Center/AI Leadership

The market share in supercomputer accelerators is over 90% held by this company. Nvidia’s Data Center segment generated $2.4 million in Q2.

Intel and AMD’s failure to come up with an equalizer to Nvidia’s $199,000 DGX A100 accelerator is why NVDA is valued higher by investors.

NVDA is currently trading at 44.2 P/E due to the $13.7 Billion data center accelerator market. By 2026, it is estimated to have a value of $65.3 million.

Nvidia’s TTM net profit of $7.1 Billion can be improved by data center accelerator products.

Wall Street’s Take

Wall Street analysts agree that NVDA should be considered a strong buy. This consensus is based on 23 Buys and one Hold. The average Nvidia p­­rice target is $239.52, implying 15.7% upside potential.

Conclusion

Nvidia’s massive lead in discrete PC and data center GPUs makes it highly profitable and fast-growing.

Disclosure: Motek Moyen didn’t hold any positions in the securities listed in this article at the time it was published.

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