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NVIDIA Positioned for Global AI and Deep Learning Growth

- By Sangara Narayanan

During its recent Build 2017 conference, Microsoft (MSFT) CEO Satya Nadella announced that the time had come for the company to shift its focus from Mobile First, Cloud First toward Intelligent Cloud and Intelligent Edge. What Microsoft was saying is that the days of centralized computing - the core of cloud computing - must now give way to decentralized computing, where most of the computational work is done closer to the point of data origin, thus the name Edge Computing.

The reason Edge Computing will be the preferred method for computing in the future is it eliminates the need to keep moving data back and forth from data centers to edge devices and allows decision making at the edge itself, reducing reaction times significantly. This will be possible in the future - even necessary - because of the growth of IoT, connected devices and, more importantly, artificial intelligence.

Generating data through devices is only one part of the equation; the other part is acting on that data. This is where artificial intelligence (AI) will have a huge role to play. For Edge Computing to prosper the way Microsoft thinks it will, the growth of Internet of Things (IoT) and AI will be key. That process is already under way.

Nearly every major technology company is working on AI while IoT platforms are slowly gaining momentum as well. These are still early days for both these segments, but the sheer number of technology firms working on these two segments is a clear enough indication that the race is truly on to improve the utility of both these futuristic technologies.

If there is one company that has perfectly positioned itself to benefit from the growth of AI, it is NVIDIA (NVDA). The chip-maker placed its bets on AI many years ago and now stands to benefit from the rapid growth of the industry, spurred by high levels of competition between tech firms to establish their credentials in the AI space.


NVIDIA's Datacenter segment posted a stunning 186% growth rate during the first quarter, reaching $409 million in revenues compared to $143 million a year before. In less than a year, NVIDIA has almost tripled its revenues from the datacenter segment, and revenues have now grown sequentially for seven consecutive quarters.

"The AI revolution is moving fast and continuing to accelerate," said NVIDIA CEO and co-founder Jensen Huang in a statement. "NVIDIA's GPU deep learning platform is the instrument of choice for researchers, internet giants and startups as they invent the future.

"Our Datacenter GPU computing business nearly tripled from last year, as more of the world's computer scientists engage deep learning," he continued. "One industry after another is awakening to the power of GPU deep learning and AI, the most important technology force of our time." - Forbes

As companies keep pushing into deep learning, the requirement for compute power is huge. NVIDIA has already positioned itself perfectly, and right now its GPUs are very much in demand, as evidenced by the surging revenue numbers. Competitors are slowly shifting their focus toward this segment, but NVIDIA is already running away with a market poised to grow for many more years.

Disclosure: I have no positions in the stock mentioned above and no intention to initiate a position in the next 72 hours.

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This article first appeared on GuruFocus.