NVIDIA Valuation Analysis

NVIDIA Valuation Analysis

Artificial intelligence is doing a lot more work than we think. There are hardly any Internet services that do not involve artificial intelligence, such as video recommendation algorithms for YouTube or Netflix, Google search results, and algorithms to detect abnormal financial transactions. In fact, the most important technology in the 4th industrial revolution is by far artificial intelligence. All innovative technologies such as the Internet of Things, virtual reality, natural language processing, computer vision, autonomous driving, and unmanned aerial vehicles, which can be said to be new technologies in the era of the 4th industrial revolution, cannot be created without artificial intelligence.

Artificial intelligence technology is advancing over time. As a result, human life is becoming more and more convenient. Things that were previously unimaginable are now possible. All the cutting-edge technologies in the world have been made possible thanks to advances in artificial intelligence. Numerous software engineers are researching artificial intelligence. Humanity will welcome a new world.

Development of hardware technology as well as software technology is essential for the development of artificial intelligence technology. Implementing artificial intelligence requires a huge amount of computation. The reason why artificial intelligence technology has developed particularly rapidly in recent years is the development of hardware. As hardware performance improves, faster computation is possible and better artificial intelligence can be created.

The most famous company in the artificial intelligence computing market is NVIDIA (NVDA). Nvidia, which dominated the gaming graphics market with the GeForce brand, is now a leading company in the artificial intelligence computing market. Nvidia’s graphics processing unit (GPU) design technology is the best in the world. Companies competing with Nvidia in the AI computing market include Intel, Google, and AMD.

In the high-performance computing market, which is essential for artificial intelligence, I think Nvidia has already technologically dominated the market. The performance of the GeForce RTX 30 series is unparalleled, and the artificial intelligence platform (A100 DGX) is the best in the world. All cloud computing companies around the world, including Microsoft, Amazon, and Google, are building data centers using NVIDIA GPUs.

References: Nvidia: Sheer Computing Power At A Bargain Price | Seeking Alpha

Nvidia stock prices are down more than 30% in the recent bear market. But don’t worry. Because Nvidia is a company that can continue to grow in the future. As long as the world doesn’t collapse, I’m sure Nvidia will continue to grow. The stock price has fallen, but the company’s profitability has not been compromised. That’s why investors are paying attention to Nvidia.


Nvidia occupies the most important position in the gaming industry. Nvidia is famous for its GeForce brand because it has the most advanced technology in the design of Graphics Processing Units (GPUs).

In order to output high-quality graphics to the monitor in high resolution, very high-speed parallel operation is required. At this time, the GPU is in charge of the parallel operation specialized for graphics processing. On the other hand, the CPU plays a role as a central control unit.

Currently, the 4th industrial revolution is rapidly progressing in several fields. And the metaverse market, represented by virtual reality, is emerging as a promising next-generation industry. As the virtual reality market grows in the future, the graphics processing power required by games will be higher. This is because virtual reality games require a high-performance GPU that can handle all graphic elements in 360 degrees.

However, it is not easy to realize high-quality virtual reality even with the GeForce RTX 3090, which is currently Nvidia’s top lineup product. It would be impossible to create a perfect virtual reality without the advent of a powerful GPU. Considering Nvidia’s rapidly developing GPU design capabilities, Nvidia’s share in the virtual reality market will inevitably grow larger than it is now.

Competition with AMD

Nvidia’s strongest competitor in the gaming market is AMD. With the release of the Ryzen processors, AMD has outperformed Intel in the desktop CPU market, but it’s underperforming in the gaming market. Few gamers use AMD Radeon graphics cards, as Nvidia GeForce graphics cards boast overwhelmingly good performance. However, AMD is challenging Nvidia’s dominance by introducing GPUs based on the RDNA microarchitecture that perform better than ever before.

Nvidia has advanced technologies that maximize gaming performance, such as Deep Learning Super Sampling (DLSS), which makes it better than AMD. There is no competitor to beat Nvidia in the GPU market yet. Currently, Nvidia’s GPU market share is 77%.

However, since Intel, the strongest player in the semiconductor field, has started developing GPUs for external graphics cards, and AMD’s technology is developing at a very fast pace, Nvidia’s monopoly competitiveness in the GPU market and gaming market is expected to gradually ease.


Nvidia’s GeForce series is a lineup that specializes in video encoding and gaming graphics processing, but Nvidia’s other GPUs are not. In particular, the NVIDIA Datacenter A100 GPU, unveiled several years ago, is used to accelerate the speed of systems that utilize large amounts of data. In the field of artificial intelligence, the main technology of the 4th industrial revolution, NVIDIA data center GPU lineup is evaluated as the best solution.

Cloud computing companies such as Microsoft, Amazon, and Google are providing cloud-based AI computing services so that customers can utilize AI technology at a low cost. Delivering high-performance artificial intelligence computing to distributed customers requires extreme data processing. This is not possible with older CPUs. So those companies need GPUs. Nvidia sells GPUs for data centers. The reason Nvidia’s recent rapid growth in sales is all about these data center GPUs.

In the 4th industrial age, data will become even more important. Depending on how data is processed and utilized, the fate of a company can be determined and an individual’s life can be enriched.

The total amount of data created on Earth in 2020 was approaching 59 zettabytes. A zettabyte is three orders of magnitude higher than a terabyte. (Terabytes – Petabytes – Exabytes – Zettabytes) According to the International Data Corporation (IDC), a US research institute, the total amount of data created on the planet will increase to 175 zettabytes by 2025.

To process massive amounts of data, the computing power provided by the GPU is required. The CPU alone takes a very long time to process data. Considering the 4th industrial revolution, data, and future industry trends, the future of NVIDIA is bright.


By unveiling the A100, a GPU dedicated to data centers, Nvidia has swept the AI GPU market dedicated to data centers. Nvidia GPUs are being used in Amazon, Microsoft and Google data centers. As the cloud computing market will grow even bigger in the coming years, Nvidia’s data center GPU sales will continue to grow as well.

Nvidia is expected to continue its growth this year as well. Although the gaming market stalled for a while due to the economic downturn, growth in other business segments is expected to be maintained. In addition, Nvidia’s profit margin is high because Nvidia is only in charge of design and other foundry companies such as TSMC and Samsung Electronics are in charge of actual chip manufacturing.

The NVIDIA DGX system is a cloud and data center platform that utilizes the A100 chip. Customers who need this system are companies that want to build their own data centers or cloud companies that provide public cloud computing services.

In the future, more and more companies are going through digital transformation. As a result, the demand for Nvidia DGX systems will inevitably increase. As a representative example, Google Cloud data center is using Nvidia DGX system.

NVIDIA NGC is a software hub that optimizes deep learning, machine learning, and HPC workflows on systems using NVIDIA GPUs. Nvidia NGC is currently available on Amazon Web Services.

Metaverse and autonomous driving are probably the first industries that come to mind for investors who are interested in industry trends. I believe that understanding future industry trends is the most important thing in stock investment. No matter how good a company’s growth potential is, unless it is a company that benefits from a promising industry in the future, it may grow relatively slowly compared to other companies, or even go bankrupt.

Nvidia is one of the companies that will benefit most from the evolution of the metaverse and autonomous driving industries. This fact alone can explain why you should invest in Nvidia. Metaverse and autonomous driving, represented by virtual reality, are promising future industries that no one doubts now.

This is the reason why investors are paying attention to Nvidia recently. If Nvidia, which designs GPUs (specialized in parallel processing), which is essential for realizing artificial intelligence, expands its business, it can enter the metaverse and autonomous driving industries. And now Nvidia is making some progress in this industry.

In order to create a metaverse, virtual reality must be realized. Virtual reality requires a higher-performance GPU than now in that it has to process 360-degree graphics. Nvidia continues to introduce high-performance GPUs every year, making it the computing leader in the metaverse market.

Self-driving cars contain many electronic components, but the most important of them is the processor. A high-performance processor is required to analyze various data collected from multiple cameras and sensors and calculate the vehicle’s position to plan and drive a safe movement route.

NVIDIA offers the NVIDIA DRIVE AGX platform for use in autonomous vehicles. This platform is an embedded supercomputing artificial intelligence platform that is specialized in processing various data required for autonomous driving. The global autonomous vehicle market is still in its infancy. If this market gets bigger in the future, Nvidia’s autonomous driving platform will be in the spotlight.

Gaming currently accounts for the largest share of Nvidia’s revenue. However, it is expected that Nvidia’s main business will be data centers in the future. Because NVIDIA is already a world leader in deep learning and artificial intelligence, and the data center sector is growing very rapidly. Over the past five years, data center sales have grown at an annual rate of 82%. It can’t be that fast. Going forward, Nvidia’s data center field will grow at a very fast pace.

Original text: 인공지능 시대, 엔비디아(NVDA) 미래 성장성 분석 및 투자지속성 판단

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