Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

How NVIDIA's 4 Key Segments Fared In 2016

By Andrew Tonner - Updated May 11, 2017 at 6:59PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Looking at the results broken out for its four main platforms only highlights the chipmaker's remarkable growth potential.

Last year was arguably the most impressive in NVIDIA's ( NVDA -3.80% ) vaunted corporate history.

This statement is all the more remarkable considering the enviable growth the chipmaker has enjoyed since its 1999 IPO.

NVDA Chart

NVDA data by YCharts

In reviewing NVIDIA's recent fiscal 2017 earnings release, we see that the company set records across nearly every meaningful financial metric, demonstrating impressive momentum in all four of the market platforms it operates: gaming, professional visualization, datacenter, and automotive. Here's the supplemental chart NVIDIA included in its earnings that breaks out its growth across its various market segments. (Fiscal 2017's fourth quarter ended Jan. 29.)

Chart of NVIDIA's operating platforms

Image Source: NVIDIA Investor Relations. 

The two main drivers in NVIDIA's record-setting year were the continued ascent of e-sports into a mainstream phenomenon and the growth in A.I. computing. It also bears noting that NVIDIA doesn't consider the OEM (original equipment manufacturer) & IP (intellectual property) segment as one of its four core business areas. In fact, the company mentioned the line item only once during its most recent conference call,  so we won't focus on it here either.

That chart just scratches the surface of NVIDIA's performance, of course, so let's delve deeper into the financial performance of each of NVIDIA's four major product platforms in its record-setting fiscal year.


By far its largest segment by revenue, NVIDIA's gaming business expanded at an impressive clip last year. For fiscal 2017 -- NVIDIA's fiscal years run almost a full year ahead of the calendar, for some reason -- gaming sales surged 44%. More encouraging still, fourth-quarter platform sales growth accelerated, rising 66% to a total of $1.35 billion.

The continued rise of e-sports and gaming VR were the primary sources of new demand. The company rolled out its new Pascal architecture in its gaming chips several quarters ago, and CEO Jen-Hsun Huang said on the most recent conference call he sees a fair amount of demand remaining among competitive gamers in the current upgrade cycle. The company said it measures its current installed base as several hundred million gamers globally,  and it sees continued growth in demand for its gaming GPU units for the foreseeable future.  

Professional Visualization

One of NVIDIA's less exciting growth opportunities, the professional visualization (PV) platform saw sales rise just 11% to $835 million in its fiscal 2017; PV platform sales rose 11% year over year to $225 million in Q4 too.

The Quadro chips around which the professional visualization platform is organized are built to cater to the needs of high-end professional graphics users such as engineers, designers, and artists whose work requires them to produce highly detailed graphical renderings. NVIDIA continues to innovate on this front. As in its gaming components, NVIDIA continues to utilize its Pascal architecture as the basis for its Quadro chipsets, which allow end users to utilize emerging design techniques such as deep learning, fluid simulation, and the like.  However, NVIDIA's PV market offers the least long-term upside of the company's four main market platforms, so let's not dwell further on it.


In contrast to professional visualization, sales in NVIDIA's datacenter platform utterly exploded in fiscal 2017. For the year, sales increased by 144% to $830 million. More encouraging still, momentum actually accelerated from one quarter to the next in all four quarters, more than tripling year over year in Q4.  On the conference call,  CFO Colette Kress attributed this dramatic uptick to adoption among "A.I. [software companies], cloud service providers deploying GPU instances, High Performance Computing, GRID graphics virtualization, and our DGX A.I. supercomputing appliance."

Specifically, Kress called out tech giants Facebook, Alphabet, and Microsoft as key "hyperscale" customers. NVIDIA chips power the A.I. and neural networks that underpin services like their respective voice-controlled virtual assistants, chatbots, image recognition and more. Moreover, they are also rolling out A.I. software as a service as part of their third-party cloud computing platforms as well. This trend is in its nascent stages though, as evidenced by the dramatic acceleration in the segment's growth rate during the year. As we head deeper into NVIDIA's fiscal 2018, this will be arguably the most important segment to watch as we gauge whether all the hype surrounding A.I. and machine learning will translate into tangible sales for component providers like NVIDIA and others.

An artist's mockup of the view of a street from the behind the digital dashboard of an NVIDIA-powered self-driving car

Image Source: NVIDIA


Turning to the last of NVIDIA's four core platforms -- to echo a constant refrain -- the automotive segment also yielded impressive results. Sales rose 52% on the year from $320 million to $487 million. However, the fact remains that this is NVIDIA's smallest platform by revenue, which speaks to the youthfulness of the self-driving car movement.

Though NVIDIA has announced partnerships  with an impressive array of automakers, tier-1 suppliers, and technology start-ups to eventually bring completely autonomous vehicles -- what the industry calls Stage 4 self-driving technology -- to the masses, most analysts believe they will not be commercially available for several more years. A key step in this process will be government review and regulation of full AV, which will require massive quantities of driving safety data upon which to base decisions. Either way, NVIDIA figures to profit immensely by supplying its chips to this ongoing revolution in one of the world's largest industries.

Full steam ahead for NVIDIA

NVIDIA has never been in a better competitive position in its corporate history. Of course, success begets competition. Other chipmakers, including Intel and  Advanced Micro Devices,  will challenge it in various areas of its vast GPU dominion. However, as the company with the largest technological lead in the space, NVIDIA's role supplying the chips powering several of tech's most important trends makes it one of the most interesting semiconductor investments on the market today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

NVIDIA Corporation Stock Quote
NVIDIA Corporation
$314.35 (-3.80%) $-12.41
Intel Corporation Stock Quote
Intel Corporation
$48.60 (-1.22%) $0.60
Advanced Micro Devices, Inc. Stock Quote
Advanced Micro Devices, Inc.
$149.11 (-5.85%) $-9.26

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/01/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.