Written by Ophir Gottlieb
PREFACE
NVIDIA Corporation (NASDAQ:NVDA) is our number one Spotlight Top Pick at CML Pro at it just got more good news. It's up 110% since we added it to Top Picks but we see substantially more upside in the next few years. While it is the best performing stock in the S&P 500, recent news reinforces our bullish thesis. The second part of this dossier has a seven minute interview I did with Peter Armstrong's CBC.
Here we go.
CLOUD
The public cloud platform realm is set to see extraordinary growth. Here is a chart we like to share a lot:
That's $80 billion in 2015 to nearly half a trillion by 2026. The two leaders in the cloud are Amazon.com (AMZN) and Microsoft Corporation (MSFT).
THE BACKBONE
The backbone to the cloud, which is really just a cluster of computers working together to share resources, is the chips. Right now Intel's (INTC) Xenon chip has 99% of the cloud market. Yes, it basically has all of it.
If you're wondering why Intel isn't a Top Pick (and why the stock isn't rising) it's because of the dual realities that as the cloud market has climbed, so the personal computer (PC) market has dropped. But it goes further.
Any time a company has that deep of a moat, it becomes vulnerable. That vulnerability is coming from NVIDIA Corporation (NASDAQ:NVDA). CML Pro noted this reality over a year ago, when NVIDIA Corporation was a $19 stock. We noted it again when we added the stock to our Top Picks for $32. Now, the rest of the world has caught on (emphasis added):
"Amazon.com (AMZN) announcing this morning it will rent use of Nvidia's graphics processing unit (GPU) chips in its Amazon Web Services, as what are called "P2 Instances," boasting, "With up to 16 NVIDIA Tesla K80 GPUs, P2 instances are the most powerful GPU instances available in the cloud."
Source: BARRON'S
Translation: NVIDIA is now a legitimate option for the Amazon cloud. But there's more (emphasis added):
"Microsoft (MSFT) yesterday saying it's forming a new division, "Microsoft AI and and Research Group," which will be staffed with more than 5,000 people brought together from across the company. The company also said it will be rolling out some Azure offerings with Nvidia chips."
Source: BARRON'S
That's right, both Amazon and Microsoft have turned to NVIDIA Corporation to allow their cloud users a choice. Those that need extreme computing speed or are running any kind of deep learning are likely going to choose the NVIDA chips.
Friends, the Cloud market is wide open for NVIDIA Corporation and the two largest providers are now offering NVIDA backed machines. Now, Amazon and Microsoft are for profit enterprises, this isn't a gift. Our take is very simple:
Amazon and Microsoft have introduced NVIDIA as an option because customers are asking for it.
MORE As if the cloud news wasn't enough, there's a lot more going on with NVIDIA Corporation (NASDAQ:NVDA) right now. This company is also the backbone to the self-driving car revolution. Here's the chart we like to share:
That's 134% compounded annual growth for the next five years, and that's the small growth. Forecasts going further are so large, it's almost meaningless to plot them - but the forecasts are likely too low. We now know that NVIDIA provides processors to more than 70 automakers working toward driver-less cars. But the next push comes from the government.
In a post from Tech Crunch entitled "U.S. federal guidelines for self-driving cars say they will lead to safer roads" we get this:
"The U.S. government revealed its much-anticipated Federal Automated Vehicles policy on Monday evening, detailing its 15-point Safety Assessment to be rolled out fully on Tuesday, which is designed to give manufacturers hoping to build and ship self-driving vehicles proper expectations around what will work for regulators in terms of meeting safety requirements."
Source: Tech Crunch
Even further, President Obama, himself, noted that "Right now, too many people die on our roads – 35,200 last year alone – with 94 percent of those the result of human error or choice. Automated vehicles have the potential to save tens of thousands of lives each year. And right now, for too many senior citizens and Americans with disabilities, driving isn't an option. Automated vehicles could change their lives.
It finally happened. No longer are self-driving car rules done state-by-state -- it now falls under Federal purview and a clear and rigorous path to this technology now exists. In English, self-driving cars are coming, they are coming sooner than anyone anticipated, and rather than fighting an uphill battle against rules and regulations, they have been fast tracked.
I spoke with Peter Armstrong live on CBC about self-driving cars and you can watch that interview here for my take. The final piece of the interview I give my forecast and aggressively stand in the face of Wall Street:
The author is long shares of NVIDIA Corporation (NASDAQ:NVDA).
WHY THIS MATTERS
Our research sits side-by-side with Goldman Sachs, Morgan Stanley and the rest on professional terminals. Nvidia is up 106% since we added it. Ambarella is up 103% since we added it. Relypsa was taken over for a 60% gain and we are already up 50% on Twitter.
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