Let me start with a few keywords that should grab the attention of any potential investor: artificial intelligence (AI), deep learning, augmented reality, and accelerated computing. With technology advancements in these areas, computers are learning to write their own software, images are clearer, and the medical world is moving like the Millennium Falcon with Han Solo at the helm.
When we take a look at how these areas are shaping our world, there's one name that is consistently at or near the top: NVIDIA (NASDAQ:NVDA). As a leader in innovative tech, from its GPUs that power gaming, enterprise graphics, and datacenters, to Jetson-like autonomous vehicles, the company has a hand in most things AI-related. But, did you know that NVIDIA's AI advancements also play an enormous part in the evolving healthcare industry?
The healthcare connection
During the annual GPU Technology Conference (GTC21) last week, NVIDIA shared over 200 presentations focused on healthcare, covering four primary areas: medical imaging, genomics, drug discovery, and smart hospitals. From kickoff to completion, NVIDIA leadership, along with its partners, drove home the importance of bringing AI and accelerated computing into surgery rooms, exam rooms, care centers, research labs, and reception areas. Advancements, such as NVIDIA Clara -- a framework application that provide tools to researchers and clinicians working in genomics, drug discovery, and medical device development -- are expanding, and bringing the medical world to the next level.
Moments in the sun
Fortunately, through the leadership of its Founder and CEO, Jensen Huang, NVIDIA has been successful in creating numerous pivotal moments to assist in revolutionizing technological advancement across the healthcare industry. Here are a few from the past five years:
- 2017: GE Healthcare is the first medical device company to use the NVIDIA GPU Cloud
- 2018: NVIDIA Clara platform introduced to bring AI to the next generation of medical instruments
- 2019: NVIDIA's Tensor Core GPUs are used for genome sequencing acceleration, allowing for rapid speeds and lowering costs
- 2020: NVIDIA debuts Clara Guardian to power smart hospitals; releases new AI models to help better detect infection; breaks genomics speed record in race to understand the SARS-CoV-2 virus
- 2021: "We are seeing the smartphone moment for every industry" – Jensen Huang, referring to thousands of companies across the world applying NVIDIA AI to create cloud-connected products with AI services that will transform the world's largest industries
A sign of good things
The global AI market in healthcare is estimated to grow between 40% and 50% per year on a compounded annual growth rate (CAGR) through 2027 -- based on various reports -- for a market value just north of $60 billion. This leaves plenty of space for NVIDIA to collect outstanding revenues. And while sales are poised to explode, an analysis produced by Accenture finds that key clinical health AI applications could also create $150 billion in annual savings for the U.S. healthcare economy by 2026.
As the company continues to innovate, it will be helped along by the winds of change that take place within the healthcare space. As we've seen with response to the COVID-19 pandemic, it is increasingly important to diagnose serious ailments early, and to be able to model and predict results and outcomes. And as we continue to fight life-threatening diseases, more clinical trials will require applications that allow for deep learning at record speed with minimal human intervention.
In the next five to seven years, the healthcare industry is expected to grow rapidly in each of the four areas that were mentioned as primary segments for NVIDIA at this year's GTC21 event.
|Market Segment||Compound Annual Growth Rate (CAGR) %||Through (Year)|
NVIDIA currently totes a price-to-earnings (P/E) ratio of 88, which some may see as a bit high, considering competitors like AMD, Google, IBM, and Microsoft all fall in a range between 22 and 38, with Intel on the lower end at 13. By comparison, the average stock on the S&P 500 trades for 47 times earnings. But then again, NVIDIA's higher ratio also reflects that investors are expecting higher growth. In this case, I think it's for good reason.
Consistency is key
Solid revenue growth and a 16% gain year to date on the stock price is a lot to get excited about. In fact, even when the market experiences downturns as a whole, NVIDIA is still taking care of its investors, as exemplified by 34 straight quarters of dividend payouts dating back to 2012 -- and increasing every year since -- to a most recent annual payout of $0.64 per share.
And at no time did the dividend ever decrease during the course of a calendar year in that span. That is proof of consistency. One might conclude, after 10 quarters at $0.16, and following an excellent fourth quarter earnings call -- revenues jumped 61% year over year and beat estimates by 3.6% -- it may not take long to see that quarterly dividend go up a bit at some point before the year is over. That would be music to any investor's ears, and the sheer potential presented by the future of healthcare computing should justify NVIDIA as a company to consider for your portfolio.