Fresh off yet another breakout quarter, red-hot chipmaker Nvidia (NVDA) was one of the first presenters at Goldman Sachs' (GS) high-profile annual technology and internet conference in San Francisco on Tuesday morning.
Nvidia's stock rose more than 80% in 2017 and is up more than 20% this year alone on the strength of continued strong demand for its GPUs from gamers, cryptocurrency miners, AI developers and supercomputer users.
Here are the top takeaways from the presentation, given by Nvidia CFO Colette Kress:
- At multiple points during the talk, Kress stressed the value of Nvidia's software stack and developer ecosystem, enabled by its CUDA programming interfaces, as differentiators. She noted how they can help Nvidia fend off rivals in the market for processors used to train deep learning algorithms, which is starting to see more competition, and -- noting Nvidia's work with game developers to optimize titles for its GPUs -- suggested it will remain a key advantage as Intel (INTC) goes after the high-end GPU market.
- Kress also mentioned how Nvidia's software investments are contributing to margin expansion. Nvidia's adjusted gross margin rose 190 basis points annually last quarter to 62.1%, and is forecast to be in a range of 62.5% to 63.5% in the April quarter.
- She also stressed how Nvidia is looking at AI as a broader opportunity covering a number of different markets. Kress called Nvidia's autonomous driving efforts "an extension" of its data center AI efforts, and also mentioned its attempts to create AI-powered solutions in fields such as traditional high-performance computing (HPC) and "edge" devices such as drones and surveillance cameras.
- Kress sounded cautiously optimistic about demand from cryptocurrency miners, which have led to major graphics card shortages. Though admitting the market is likely to remain volatile -- and the recent cryptocurrency selloff could make it more so -- she reiterated that Nvidia believes mining-related demand grew sequentially last quarter, and predicted demand will continue for some time. Kress also observed that some GPUs being sold end up being used for both gaming and mining, thus making it hard to cleanly place those sales in one category or another.
- There wasn't a whole lot of new information about Nvidia's automotive efforts. Kress did, however, make a point of declaring that there's an industry-wide push to make autonomous driving a reality -- one encompassing not just automakers, but suppliers, ride-sharing firms and others. And she talked up the potential of Nvidia's powerful and costly Drive PX Pegasus computing board -- it pairs two system-on-chips (SoCs) with two discrete GPUs -- to power Level 5 (fully driverless) autonomous cars, as well as Level 4 vehicles that have steering wheels but can take over from drivers in most situations.