Nvidia (NVDA, Financial) has invested almost $1 billion in its new Tegra K1 processor. It may seem like a risky bet; however, if you look at the long-term prospects, Nvidia is likely to benefit from this investment. Although Nvidia is expected to gain traction in the mobile business, the automotive market can prove to be the primary growth driver in the future. Let’s take a look at the prospects.
Benefiting from Tegra
Reporting 200% yearly hike, Nvidia reported its fourth back to back quarter of development in Tegra revenue in Q2 2015. The company saw 110%, 18% and 14% consecutive development in Tegra processor revenues in Q3 2014, Q4 2014 and Q1 2015, separately. Nvidia foresees Tegra revenue to keep expanding, determined by three key high development applications: smartphones, automobile and gaming.
The Tegra K1 will help Nvidia grow into the in-vehicle infotainment market. Also, it will likewise help the company to spread out into the field of heading toward oneself autos. The company has effectively expressed it will concentrate all the more on the in-auto infotainment market, and I would like to think it is the right choice. In 2011, deals in the worldwide in-auto infotainment market remained at over $32 billion and are relied upon to cross $41 billion by 2016. Therefore, its profoundly likely the company will advantage from the influential Tegra K1.
A look at the gaming market
PC gaming accounts for nearly 40% of the overall gaming business, which is higher than supports, telephones, tablets or some other individual gaming fragment. Nvidia's latest Geforce sits at the focal point of the PC gaming space, and has found a way in over 100 million gaming PCs to date. Nvidia guarantees that its new Geforce GTX GPU conveys the execution of the most recent era reassures, making the Geforce gaming PC the biggest focus for programmers of new-gen games.
Journal gaming has developed at a CAGR of 51% in the most recent three years and Nvidia accepts that the release of new games in the foreseeable future will further drive growth for its GPUS. The business is extending both as far as unit volume, and in addition ASPs, gaming market keeps growing.
Hewlett-Packard’s Chromebook
Hewlett-Packard is the second major OEM to utilize the Tegra K1 on Chromebooks. Acer was the first company to launch a Tegra K1-controlled Chromebook last August. Acer is the new lord of Chromebook deals – it commands 30% of the worldwide market while previous No.1 Samsung (SSNLF, Financial) has 24%, while Hewlett-Packard (HPQ, Financial) stands at 21%.
Nvidia can benefit a ton if Samsung and other Chrome OS gadget creators likewise utilize the Tegra K1. Chromebook deals are expanding at a fast pace. Gartner is anticipating that 5.2 million Chromebook units will be sold in 2014. That is practically a 80% increment over the 2.9 million Chromebooks that were sold a year ago.
Gartner likewise is anticipating Chromebook deals to very nearly triple by 2017, to 14.4 million units. Also, the U.S. education system purchased 1 million Chromebooks in Q2 2014, while business users will buy around 5 million Chromebooks.
Conclusion
Looking at the future possibilities, it is evident that Nvidia’s investment will pay off. The Tegra K1 has helped Nvidia gain traction in multiple markets, as a result of which the company’s share price should increase from the present levels, making it a valuable buy for investors.
