Nvidia Corp. is best known for the graphic processor units used in gaming systems, which makes them more lifelike and helps them run faster.
The company’s shares split four-for-one in July (NDQ: NVDA)and have moved sharply higher since. The stock is up 14% in the past three months and 59% year-to-date. Nvidia is having a record year as demand for its chips has been helped by stay-at-home trends and a global shortage of microchips has pushed prices up.
Nvidia is also a leader in the chips used in artificial intelligence (AI) and cloud-based computing applications. It makes the central processing units (CPUs) that provide the brains for autonomous robots, self-driving cars, and drones. A growing area is the processors used by crypto-currency miners. The mining adds transactions to a blockchain and is part of a process that allows everyone to trust the transaction.
The shares closed Tuesday at US $206.99.
Recent developments: Nvidia is a member of the high-tech club that has profited from the pandemic as more people work from home, play video games online, and use its chips to mine cryptocurrencies.
In its latest quarter, reported in late August, year-over-year revenue of $6.5 billion was up 68% and net income of $2.4 billion $0.94 a share) was 282% higher. Both were records.
Discussion and Outlook: Nvidia is in a period of sustained growth with semiconductors of all kinds in short supply even as demand for them skyrockets. Its graphic chips are increasingly important for a variety of technologies.
Nvidia’s $40-billion acquisition of British chip designer ARM hit a snag in August after a UK regulator found it could damage competition and requires further investigation. Nvidia sees the acquisition as key to its next level of growth and remains confident it will be concluded by 2022.
ARM is a major player in global semiconductors, a sector fundamental to technologies from artificial intelligence and quantum computing to 5G telecom networks. Its designs power nearly every smartphone and millions of other devices. The takeover would enhance the prospects of both companies.
Dividend and buybacks: Nvidia last raised its dividend two years ago. The $0.64 annual payment yields 0.07% at current prices.