How 2 Smart Moves Help NVIDIA Win Big New Markets

Since the first GPU was invented in 1999, NVIDIA (NASDAQ:NVDA) has grown beyond PC gaming to become a leading supplier of graphics, data center, and edge AI solutions. According to this growth strategy, NVIDIA has recently completed two acquisitions that, if accepted, will allow NVIDIA to aggregate world-class CPUs, GPUs, and networking technology in its products—one-upping rivals and boosting profits in the process.

Merging with Mellanox

In April 2020, NVIDIA paid $7.13 billion in cash to purchase Mellanox, a company that offers high-performance interconnecting solutions—silicon, switches, adapters, and cables needed to network a data center. Management predicts that this would raise NVIDIA's overall data center business potential to more than $60 billion by 2023.

So far, the financial success of the merged organization has met Wall Street's expectations. NVIDIA posted total revenue of $4.73 billion in the most recent period, up 57% from the previous year. Mellanox accounted for 13 percent of this figure, producing $615 million in sales, up 84 percent of the prior year. That's great news, but the acquisition goes beyond sales synergies.

Jensen Huang, the visionary CEO of NVIDIA, predicts that the future machine will reach beyond the server and into the network. In other words, rather than merely moving data around the system can help process data, lighten the burden on CPUs and make data centers more efficient. That's why the purchase makes sense. By integrating its GPUs with Mellanox's networking technology, NVIDIA will take a more comprehensive approach to the data center and in-house design products that Intel and AMD cannot match. But there is still a missing piece of the puzzle: the CPUs.

Acquiring ARM

In September 2020, NVIDIA announced its intention to purchase ARM from Japan's SoftBank in a $40 billion cash and stock deal.

ARM has built a large CPUs ecosystem, although its business model varies from rivals such as Intel and AMD. Instead of building processors, ARM licenses its intellectual property to partners including Qualcomm and Samsung, who build chips and pays ARM licensing and per-chip royalty fees. This business model produces recurring sales with a high gross margin and has helped make ARM processors the most common processors in the world used by more than 70% of the world's population. But ARM also has another advantage: its processors are more versatile and cost-effective than the x86 chips designed by Intel and AMD. This combination of market-leading size and productivity would give NVIDIA a significant advantage in a wide variety of markets.

In the data center, the integration of NVIDIA GPUs, Mellanox Networking, and ARM CPUs will enable NVIDIA to deliver a more complete computing platform than any rival, one that stretches from server to network, designed to tackle anything from scientific computing to artificial intelligence. This will make NVIDIA a one-stop-shop for data center customers, an advantage that should translate into strong revenue growth.

The acquisition will also boost NVIDIA's role in other final markets. For example, ARM processors are currently used in 90% of mobile and IoT devices, while NVIDIA chips are practically missing. Through acquiring ARM, NVIDIA would gain access to an extensive network of customers and developers; using these partnerships, NVIDIA would be able to sell its GPUs alongside ARM processors, generating revenue streams in new markets.

Overall, NVIDIA's management forecasts that these prospects will more than double its target market to $250 billion by 2023. This figure reflects more than 16 times NVIDIA's revenue in the last 12 months, leaving plenty of room for future growth. But there's another reason investors need to be excited about it.

NVIDIA could use the ARM scale to begin licensing its intellectual property rights to other companies. This business model allowed ARM to generate gross margins over 90%. If NVIDIA were to take the same path, some huge market potential would have reached its bottom line.

A Final Word

Unfortunately, acquisitions don't always perform as well in reality as they do on paper. If accepted, investors should pay attention to the growth in revenues and margins of NVIDIA. If development slows or margins shrink, it may be a sign that things are not going as expected. Investors should also be mindful of the strategy at stake here. The acquisition of ARM also needs approval from regulators in the United Kingdom, China, the European Union, and the United States. Any deterioration in relations between these countries could delay approval.

But if all goes well, the mergers could be good news for investors. NVIDIA's GPUs and AI solutions are now regarded as world-class, consistently outperforming and outperforming products from competing chip makers. These acquisitions will improve that competitive advantage, thus generating revenue synergies and operating efficiencies that could boost NVIDIA's profitability.

65 comments

  1. slonned
  2. slonned
  3. slonned
  4. slonned
  5. slonned
  6. slonned
  7. slonned
  8. Williamsmesk

    milfs dating.com
    [url="http://datingsitesover.com/?"]first met dating[/url]

  9. Williamsmesk

    best free dating site for serious relationships
    [url="http://datingonlinecome.com/?"]best dating headlines ever[/url]

  10. KevinLig

    actual gay dating sites
    really good gay dating sites
    [url="http://gaychatgay.com?"]sites for gay dating[/url]

  11. KevinLig

    episcopal gay dating
    gay interracial dating
    [url="http://gaychatus.com?"]savannah gay dating[/url]

  12. KevinLig

    gay dating j
    cuba gay dating
    [url="http://gaychatgay.com?"]viktor228, gay ukraine dating[/url]

  13. KevinLig

    gay lesbian online dating
    older gay men dating
    [url="http://gaychatus.com?"]gay dating 50311[/url]

  14. KevinLig

    gay dating sites on facebook
    gay dating michigan
    [url="http://gaychatgay.com?"]silver daddies gay dating[/url]

  15. KevinLig

    gay dating site without nudity
    danger gay dating site
    [url="http://gaychatgay.com?"]100 free online gay dating[/url]

  16. KevinLig

    gay dating sim 18+
    best gay dating sims
    [url="http://gaychatgay.com?"]gay dating 19[/url]

  17. KevinLig

    gay dating websites india
    gay dating ashtabula county
    [url="http://gaychatus.com?"]corey gay dating episode[/url]

  18. Jamel
  19. Viagra

    find cialis online best price

  20. traitly
  21. Oscineded

    https://buysildenshop.com/ - viagra sales online in uk

  22. cialis on line

    Kamagra Oral Jelly Cvs

  23. Tyrone

    Thanks for one's marvelous posting! I really enjoyed reading it, you
    can be a great author.I will be sure to bookmark your blog and will come back in the foreseeable
    future. I want to encourage that you continue your great writing,
    have a nice weekend!

    my blog post web hosting or

  24. Titismles

    https://buystromectolon.com/ - buy stromectol 6 mg online

  25. Stromectol

    Buy Birth Control From Thailand

  26. Latesha

    This piece of writing presents clear idea in support
    of the new users of blogging, that quest bars (http://tinyurl.com/n9np6pw) actually how to
    do blogging and site-building.

  27. itewhex

    https://buypropeciaon.com/ - propecia results reddit

  28. Maroweawl
  29. Eleanor

    This web site really has all of the information and facts I wanted concerning this subject and didn't know who to ask.

    my web-site asmr their

  30. Tanja

    Heya i am for the primary time here. I came across this board and I find It truly useful
    & it helped me out much. I hope to offer one thing back and help others such as you
    helped me.

    Also visit my blog post: scoliosis surgery our

  31. PatrickSix

    gay dating philippines
    transgender gay dating
    [url="http://freegaychatnew.com?"]gay male dating in alabama[/url]

  32. PatrickSix

    gay bear dating site
    gay cock sucker dating
    [url="http://freegaychatnew.com?"]a gay man dating bi man tips[/url]

  33. Blaine

    I think this is among the most important information for me.
    And i am glad reading your article. But wanna remark on some general things, The web site style is great,
    the articles is really nice : D. Good job, cheers

    Look at my blog ... it asmr (http://bitly.com/3kKtL7d)

  34. Lewis

    Thanks for sharing your thoughts about there. Regards

    Feel free to surf to my webpage asmr our

  35. PatrickSix

    free gay dating chat
    gay geek dating site
    [url="http://gaychatgay.com?"]gay sex dating reviews[/url]

  36. PatrickSix

    gay farmer dating
    the gay sex dating game
    [url="http://gaychatgay.com?"]dating gay site[/url]

  37. Rufus

    Its not my first time to pay a asmr, j.mp, visit this website,
    i am visiting this web page dailly and take good facts from here all the time.

  38. Meredith

    I got this site from my friend who informed me regarding this web page and now
    this time I am browsing this web site and reading very
    informative posts at this time.

    My homepage :: with scoliosis surgery

  39. itewhex
  40. Michaelnix

    gay nyc dating
    gay guys dating site
    [url="gaydatinglosangeles.com?"]good free gay dating site[/url]

  41. Michaelnix

    a real true gay dating
    gay disabled dating
    [url="dating-gaym.com?"]best gay dating cities[/url]

  42. poidayrap
  43. Stromectol

    Amoxicillin And Menstruation

  44. sefeanaps
  45. Propecia

    Free Shipping Provera Meprate Irregular Periods In Internet Shop

  46. Henrybrura

    gay dating site spain
    indian gay website dating vegas
    [url="http://gaydatingcanada.com/?"]gay dating forum[/url]

  47. Henrybrura

    gay speed dating mcheater uk
    real jocks gay dating site
    [url="http://gayedating.com/?"]omar mateer gay dating site[/url]

  48. NoffAnend
  49. Lasix

    Buy Viagara Online No Prescription

  50. Henrybrura

    muscle gay dating
    christian gay dating site
    [url="http://gaydatingcanada.com/?"]dating a crossdresser gay[/url]

  51. Henrybrura

    grindr scam gay male dating
    hily dating site no gay
    [url="http://dating-gaym.com/?"]patrick taylor gay dating[/url]

  52. icolladia
  53. plaquenil and pregnancy

    Viagra Discount Online

  54. Baimame

    http://buypriligyhop.com/ - priligy en france

  55. suepext

    https://buylasixshop.com/ - furosemide tablets to buy

  56. FrauffLup
  57. Alma
  58. Axiotolal

    https://buyzithromaxinf.com/ - amoxicillin vs azithromycin

  59. twilsOm
  60. Priligy

    Cialis And Viagra Packages

  61. addibly
  62. Nicolas

    Системно-феноменологическая психотерапия.
    Структурные расстановки Расстановки по Хеллингеру.
    Метод Берта Хеллингера. Расстановки.
    Структурные расстановки.
    Расстановки по Хеллингеру.

  63. valtrex x zovirax

    cialis mejor viagra

  64. Valarie
  65. CoahPhoda

    https://buyplaquenilcv.com/ - buy hydroxychloroquine sulfate online

Comment

Your email address will not be disclosed. The required fields are marked with*.

Related recommendation

No related articles!

微信扫一扫,分享到朋友圈

How 2 Smart Moves Help NVIDIA Win Big New Markets