The GPU (Graphic Processing Unit) market has seen a phenomenal growth in past few years. GPUs are the driving engines for the visual computing. The need for speed of visual computation has been increasing this has influenced the growth of the GPU market. GPUs are primarily used in various gadgets like smartphones, tablets, workstation, personal computer, gaming consoles. The market for each of these gadgets has witnessed exponential growth has also leveraged the growth of various GPUs manufacturing industries. NVIDIA (NVDA, Financial) is one such industry leaders as a manufacturer of GPUs and OEM supplier for various gadgets manufacturers. Over the past the company has been recording growth in top and bottom line and has been investor’s favourite stocks in their portfolio. You can read the rest of the article as I have tried to explain, why is NVDIA a favourite tech stock of an investor.
Strong quarter
The company recently released its results for Q3- 2015, and was firing all cylinders. Revenue increased by 16% year over year, to record $1.23 billion as compared to $1.05 billion in the Q3-2014. It also recorded revenue growth of 15% for on a nine month basis for all three quarters of the fiscal 2014 as compared to first three quarter of fiscal 2014 that recorded $2.99 billion. NVIDIA Corporation is performing really well from the past few years. It is giving results beyond the expectation from past year and still continuing that performance.
The revenue growth drivers for the company were mainly due to increasing demand of high speed computing, virtualizations and web services that generates the wider market for the GPUs. Various Auto industries are now deploying high end instrumentation in their automobiles for a better driving experience with high end features. This has generated huge demand for Tegra series of microprocessors manufactured by Nvidia.
Journey Ahead
The company is focusing on the visual computing platforms for data centers which can further provide growth momentum. The company is quite optimist of its growth and has provided a revenue guidance that can be around $1.2 billion in the Q4-2015, inline with the consensus estimate of $1.2 billion. The non-GAAP margins are anticipated to reach 55.5% on a +/- 50 basis points.
Market analyst anticipates NVDIA to attain growth of 45.2% in the current fiscal year. Furthermore, the company is expected to grow at 8.28% every year for the next five years.
Paybacks
Investors of NVIDIA, have been always satisfied with the payback policy of the company. The company had announced its share repurchase program, last year. During the first three quarter of fiscal 2015, the company paid $140 million as dividends and repurchased 44.2 million shares. As a result, the company has returned to shareholders $950 million in the first three quarters of fiscal 2015. In Q3-2015, the company paid cash dividend of $46 million and repurchased 16.8 million shares. Moreover, NVIDIA intends to payback approximately $600 million to its investors in next fiscal 2016 through cash dividends and share repurchases. This has further gained the confidence of the investor in the company.
Conclusion:
The company is doing really great in its core segment of graphic processing units. More and more research and development would give rise and growth to the company. The company also safeguards the interest of its investor with the share repurchase programs and dividends which again makes it one of the favourite tech stocks for an investor.
