Friday, January 6, 2017

Motley fool: NVIDIA's overall opportunity is incredible

Motley fool says that  booming data center business is just one aspect of NVIDIA's enviable growth outlook. The company's graphics processors also help power coming next-generation technologies including self-driving cars and virtual reality in addition to its artificial intelligence applications. Estimates as to the exact growth potential of each market should be taken with a grain of salt, but analysts predict 10 million self-driving cars could be on the road by 2020, a number that could reach 21 million by 2035. Similarly, another well-respected research company believes shipments of virtual reality hardware will exceed 64 million by the start of the next decade. 

Of course, NVIDIA investors should expect other semiconductor names to compete for market share in each of these booming markets. However, even if the above estimates prove over-optimistic by a fair margin, the aggregate growth opportunity afforded by these several growth markets should prove more than enough to benefit multiple chipmakers. NVIDIA's technology advantages still make it the best bet to dominate each of these markets, though.

Lastly, it also bears noting that NVIDIA's growth certainly doesn't come cheaply. Its shares trade at 70 times its trailing-12-month earnings per share and 40 times next year's estimated EPS. For context, the S&P 500 currently trades at 25 times its current EPS. 

At the same time, Bank of America estimates call for NVIDIA's sales, profits, and free cash flow to all double by 2019, a point at which growth markets like self-driving cars should still be in their infancy. Patience is a virtue in investing, and those willing to wait for the gains from NVIDIA's impressive upside to add up should be rewarded over the long term.

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