5G is the latest wireless network technology that comes with low latency. In simple words, we can say that it is the fifth-generation wireless network that will offer streaming services nearly 100 times faster than the existing 4G network. 5G will enable users to download heavy files in a blink of an eye, besides intelligently routing the signals where they are needed.
Many companies have been working to support the roll-out of the 5G network on a large scale. Overall, we can divide those companies into two main categories including semiconductor manufacturers, or chipmakers, and makers of basic equipment. To elaborate further, basic equipment includes things that are needed to support the 5G networks such as 5G small cells and antennas among many other things.
NVIDIA is a potential 5G beneficiary
Many companies could benefit from the massive opportunities offered by 5G roll out across the globe. NVIDIA Corp. (NASDAQ: NVDA) is one of those stocks that could capitalize on the 5G revolution.
Moreover, high-end video games played by users over the cloud also need GPUs to ensure smooth streaming over a network. The demand for NVIDIA GPUs is expected to increase in the coming years after the mass deployment of the 5G network around the world. The reason is users will prefer playing heavy games on the cloud supported by GPUs, as this will end the need for maintaining or buying expensive hardware for running those games.
Cloud gaming has emerged as an exciting innovation in the modern world. The idea of enjoying games, which usually require a high-end PC or laptop, on any device is alluring. Cloud gaming is expected to turn into a huge growth market with the 5G development, which has been disrupted in recent months due to the Covid-19 pandemic. However, the long-term opportunity is still there.
The Santa Clara, California-based chipmaker thinks that a vRAN, defined by software, can play an important role in the adoption of 5G due to its high bandwidth and low latency in real time. Contrary to conventional setups, vRAN can be smoothly transferred from one virtual machine to another, as it is not attached to any specific hardware.
Therefore, 5G networks can adapt to the users’ needs and balance the usage of resources with the help of vRAN. Moreover, vRAN can be deployed at lower costs as compared to conventional networks that ultimately help telecom operators save money. vRAN market is expected to grow at a rapid pace, given the advantages and efficiencies it brings to the 5G network.
Telecom companies such as Ericsson and SoftBank have already inked partnerships with NVIDIA for using its Aerial vRAN.
5G roll-out is still in the initial phase, so we can say that there is massive room for NVIDIA
to grow in the space in the coming years.
NVIDIA financial performance
On a GAAP basis, earnings rose to $2.12 per share in the quarter, representing a surge of 46 percent from the same period last year. On a non-GAAP basis, profit came in at $2.91 per share, translating to a rise of 63 percent from the year-ago quarter.
If we look at the sale performance of different segments, revenue from the data center segment skyrocketed 162 percent on a year-over-year basis to hit $1.90 billion in the quarter, while gaming revenue climbed 37 percent to $2.27 billion.
On the other hand, revenue from the automotive segment came in at $125 million, representing a decline of 23 percent from the same period last year. Revenue from the professional visualization business also fell 27 percent to $236 million.
Q4 financial outlook
Moreover, the company projected operating costs of around $1.64 billion on a GAAP basis, and nearly $1.18 billion on a non-GAAP basis.
Several leading research firms have been keeping an eye on NVIDIA
Among other research firms, Needham analyst Rajvindra Gill retains a “Buy” rating with a price target of $700 per share on the stock. Separately, an analyst at Mizuho Securities, Vijay Rakesh reaffirmed a “Buy” rating, while increasing his price target to $605 per share.
Overall, 31 analysts have “Buy,” 6 have “Hold,” while just one has a “Sell” rating on NVIDIA stock
NVIDIA stock’s performance
The recent performance of a stock is one of the key indicators in predicting its future growth momentum. NVIDIA stock