Can NVIDIA repeat it's 2016 performance? Will it become member of the FANGS club?

1. Stock report | NVIDIA Corp | January 27th
, 2017 | NASDAQ: NVDA 1
32 Analyst covering NVIDA
• 56% have a buy recommendaEon with an average 12-month
price target of $106.
• 37% have recommending holding and have a 12-month price
target of $88
• Avg. EPS esEmate of $2.44 for FY 2016
SECURITY OWNERSHIP OVERVIEW
Majority held by financial insEtuEons
• FMR LLC 79 Million shares
• Vanguard 41 Million shares
• Blackrock 33 Million shares
KEY STOCK STATISTICS
52-Wk Range $119.93-24.75
Volume 13,084,499
Average Daily Volume 14,784,481
Market CapitalizaEon $57.67 Billion
Enterprise Value $54.43 Billion
P/E (Trailing) 55.28
Dividend (as of
11/23/2016)
$0.56
Dividend Yield 0.50%
Shares Outstanding 539 Million
NVIDIA Corp
RECOMMENDATION INDUSTRY SECTOR INVESTMENT Price Target Price
BUY Semiconductors Technology Large cap growth $109.38 $115.00
PRICE PERFORMANCE
5 day 2.9% 60 day 16.5%
30 day -6.5% 52 week 220%
NVIDIA is a leader in computer graphics that are used in PC, Mobile and Game consoles. It is widely
recognized for its GPU that has redefined modern computer graphics and revoluEonized parallel
compuEng. Today, NVDIA is known as “the AI compuEng company” and it is poised to provide the next era
of compuEng for computers, robots, virtual reality and self-driving cars. For 2016, NVidia was the best
performer on the Nasdaq100 last year and yielding 2X compared to the SOX and NDX indexes.
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NVDA US Equity - Last Price SOX Index - Last Price NDX Index - Last Price
Investment Advisor
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Chart Title

2. Stock report | NVIDIA Corp | January 27th
, 2017 | NASDAQ: NVDA 2
PRODUCT LINE AND REVENUE BREAKDOWN
NVIDIA provides visual compuEng soluEons for the Gaming, Professional VisualizaEon, Datacenter and
AutomoEve markets through its GPU and Tegra processors. Its verEcal integraEon provides a one stop soluEon
that integrates hardware, system sokware, programmable algorithms, systems and services to create unique
value for the markets it serves. The GPU business units Ge Force product line was the key driving force for
NVIDIA’s 2016 growth. This was mainly due to explosive growth in discrete GPU market that diluted the impact
of conEnued downward spiral of the PC market. The Terga business unit faced challenges, with strong
compeEEon from Intel especially in the mobile space, but the loss was parEally offset by increase in sales of
Terga products to the automoEve infotainment market.
FY 2016: Revenue ($MN) by
product
FY 2016: Revenue share by
market/end user
FY 2016: Revenue ($MN) by
geography
GPU Business. GPU business
revenue increased by 9% in fiscal
year 2016 compared to fiscal year
2015. GPU accounted for 85% of
the total revenue. driven by sale to
the gaming industry. Revenue from
sales to customers outside of the
United States and other Americas
accounted for 79% of total revenue
for fiscal year 2016.
Tegra Processor Business. Tegra
Processor business revenue
decreased by 3% in fiscal year 2016
compared to fiscal year 2015. This
decrease was driven by a decline in
sales of Tegra products for OEM
smartphones and tablets.
However, Tegra products serving
automoEve systems grew by
almost 75%, offseong the losses.
All Other. License revenue comes
from the patent cross licensing
arrangement entered with Intel in
January 2011. Revenue was flat at
$264 million for fiscal years 2016,
2015, and 2014. The final payment
under this arrangement was
received in January 2016, and will
be recognized as revenue into the
first quarter of fiscal year 2018.
MARKETS
PRODUCT LINES
BUSINESS SEGMENTS
NVIDIA VISUAL COMPUTING SOLUTIONS
GPU
GE Force
PC
Gaming
Quadro
Creative
application
Tesla
Deep
learning
GPU
Servers
GRID
Cloud
Terga
Terga
OEM
DRIVE
Automotive
SHIELD
Mobile

3. Stock report | NVIDIA Corp | January 27th
, 2017 | NASDAQ: NVDA 3
COMPETITORS AND MARKET SHARE
AMD and Intel are NVIDIA’ key compeEtors in the GPU,
Mobile and Datacenter market space. For the 2015 and
2016, NVDIA remained the leader in discrete GPU
market, but AMD has slowly started to capture some of
the market share in 2016. For the fiscal year 2017F, the
YOY growth for gaming business, professional
visualizaEon, datacenter, auto and OEM businesses are
expected to be 41%, 9%, 132%, 54%, and -9%
respecEvely. The strong demand for GPU products
reflects a combinaEon of conEnued strength in PC
gaming and increased sales of Maxwell-based GPU
products.
NVIDIA has proacEvely diversified it’s offering, and gained tracEon in new and emerging markets – cloud
compuEng, autonomous driving, virtual reality and AI. The cloud compuEng is NVidia’s fastest growing offshoot.
Cloud service providers – Facebook, Amazon, and Microsok have added GPU acceleraEon to their services in a
bid to bring professional-grade graphics processing and super-compuEng performance to computers that run on
the cloud.
Today Honda and BMW use NVIDIA's Tegra GPUs for their Honda Connect and iDrive infotainment systems.
Tesla's industry-leading touchscreen infotainment system is also powered by NVIDIA's processors, as is the
company's 12.3-inch instrument cluster display. In fact, NVIDIA's GPUs can be found in about 10 million different
cars on the road right now. In 2017 CES it announced NVIDIA DRIVE™ -a sensor fusion plauorm for autonomous
driving vehicles which Audi is planning on implemenEng it on its next generaEon self-driving cars by 2020. The
growth in the professional visualizaEon is complemented by NVDIA’s GPU cloud compuEng plauorm that allows
users to carry out enables collaboraEve and interacEve 3D experience on laptops, tablets or even smartphones.
The conEnued downward spiral of the OEM will most likely conEnue, but the losses will be offset by the strong
growth in the remaining businesses. The combined revenue for automoEve and datacenter is ~ 12% of total, but
in the long term, these new markets will allow the company to diversify its product offering and add value to the
company. Short-term, however it faces challenges from both Intel and AMD who are aggressively developing
both discrete and integrated GPU technologies in the gaming and OEM markets.
Yearly revenue 2015-2016 & 2017F-2019F
YOY revenue 2015-2016
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2015 2016 2017 2018 2019
Revenue by market (in millons)
Gaming Professional Visualization Datacenter Auto OEM & IP
37%
-6%
7%
75%
41%
9%
132%
54%
-9%
Gaming
Professional
Visualization Datacenter Auto OEM & IP
YOY growth-2016-2017
0%
20%
40%
60%
80%
100%
Q2 2016Q1 2016Q2 2015
MARKET SHARE
AMD NVIDIA Other

4. Stock report | NVIDIA Corp | January 27th
, 2017 | NASDAQ: NVDA 4
FINANCIAL ANALYSIS
(IN MILLIONS, EXCEPT PER
SHARE DATA)
JAN 2014 JAN 2015 JAN 2016 JAN 2017F JAN 2018F JAN 2019F
REVENUE 4,130 4,682 5,010 6,778 7,953 9,441
Gaming 2,058.0 2,818.0 3,968 4,365 4,758
Professional visualizaTon 795.0 750.0 821 903 994
Datacenter 317.0 339.0 786 1,179 1,769
Auto 183.0 320.0 492 739 1,108
OEM & IP 1,329.0 783.0 710 767 813
Cost of revenue 1,862 2,083 2,199 2,975 3,491 4,144
gross profit 2,268 2,599 2,811 3,803 4,462 5,297
OperaYng expenses:
Research and development 1,336 1,360 1,331 1,344 1,358 1,371
Sales, general and
administraEve
436 480 602 814 956 1,134
Restructuring and other
charges
- - 131 - - -
Total operaEng expenses 1,772 1,840 2,064 2,159 2,313 2,506
Income from operaEons 496 759 747 1,644 2,149 2,791
Interest income 17 28 39 40 42 44
Interest expense (10) (46) (47) (62) (62) (54)
other income, net 7 14 4
Income before income tax
expense
510 755 743 1,622 2,129 2,782
Income tax expense 70 124 129 276 362 473
Net income $440 $631 $614 $1,346 $1,767 $2,309
Net income per share:
Basic $0.75 $1.14 $1.13 $2.50 $3.28 $4.28
Diluted $0.74 $1.12 $1.08 $2.06 $2.71 $3.54
Weighted average shares used
in per share
ComputaEon:
Basic 588 552 543 539 539 539
Diluted 595 563 569 653 653 653
Cash dividends declared paid
per common share
$0.31 $0.34 $0.40 $0.56 $0.58 $0.60

5. Stock report | NVIDIA Corp | January 27th
, 2017 | NASDAQ: NVDA 5
SWOT
STRENGTHS WEAKNESS
• Strong growth in mulEple new market
segments
• AutomoEve and Datacenter market product
yield higher margins
• Blockbuster game Etles conEnue to drive
graphics-rich gaming
• Cloud service providers are increasingly
looking to GPUs to power the most complex
parts of their cloud compuEng and deep
learning technology -- and NVIDIA could
benefit in the long term
• Leader in AI car compuEng
• OEM and WorkstaEon markets conEnued slow
down
• Lack of presence in mobility market- business
overtaken by Intel and Qualcomm
• Manufacturing yield and product recall
• Significant amount of revenue from a limited
number of customers
• DiversificaEon in product and markets
o 80% of revenue from single product line
o 50% revenue from gaming markets
• Cyclical nature of discrete GPU market
OPPORTUNITIES THREATS
• NVDIA DRIVE has a garnered strong interest
from the automobile community for
autonomous driving vehicles
• Growth drivers — gaming, VR, AI, and self-
driving cars
• Gaming-as- sharing-medium, and VR will fuel
NVIDIA’s growth in the new VR gaming market
• New products such as SHEILD in TV and
gaming markets
• PotenEal applicaEon of AI in – manufacturing
(FANUC, Japan) and healthcare (Cancer
Moonshot)
• Self-driving cars for the automoEve industry –
potenEally by 2020 with Audi.
• AMD market creep into the Discrete GPU market
• Possible collaboraEon between AMD and Intel
to accelerate the Intel’s development of discrete
GPU
• Non-renewal of IP licensing with Intel
• Earlier adopEon of integrated GPU offered by
Intel
• Cloud based subscripEon for gaming could
soken the demand for high end standalone
gaming video cards.
• 79% of revenue from overseas market mainly
from China and Taiwan- changes in trade policy
with China could hamper future revenue