nvidia.jpg

On August 9, 2004, NVidia stock opened at $3.23 per share (split-adjusted). Today, even with a large, one-day price drop, NVidia stock opened at $36.85. That’s over 11.4 times in a little over 4 years! To put that in perspective, it has been a better stock than Google in the same time period. (Google is up almost 8 times since their IPO in August 2004).

How NVidia achieved such growth:

  1. NVidia has had excellent execution in the midst of intense competition. As Intel and AMD/ATI continue to wage war with NVidia it has somehow maintained its lead in high-end graphics cards with excellent design and timeliness. You can almost count on them to introduce a new, cutting-edge graphics card every 6 months. Meanwhile, AMD/ATI have had delays in recent years, which have helped NVidia’s profit-margins.
  2. NVidia has provided GPUs to game consoles. NVidia wins include: the original XBox and Playstation 3.
  3. NVidia GPUs are in mobile phones. The mobile market is gigantic. As we have talked about in previous articles, the cell phone subscriber count was 2.7 Billion at the end of 2006. NVidia has made its mark in this arena.
  4. NVidia has strengthened it grip on the motherboard market. It’s nForce-line has become well-known in the industry and has been well-received.
  5. NVidia has moved into high-performance computing (HPC). This has allowed them to move from strictly entertainment into the enterprise. Lucrative markets include: biotechnology, data mining, military simulations, etc.

As you can see, NVidia has diversified their portfolio in some smart ways. However, as mentioned in a previous article, NVidia needs a x86 CPU to continue to stay competitive in the long-term. Right now, they’re sitting pretty, and with a current market capitalization hovering around $20B, they have room to grow. But without a x86-compatible CPU, I won’t be buying big in this stock at current prices. I’m waiting for a sale.