Last Thursday Nvidia dropped it’s Q3 2016 (FY2017) results and crushed financial records all over the map. Revenue for the quarter was a cool $2 billion up 54 percent from a year ago when Maxwell was still the company’s primary product. To say that Pascal has given Nvidia a new lease on life seems like a bit of an understatement. Looking at quarterly revenue over the past two years Nvidia’s booked between $1.1 and $1.4 billion while it shipped its Kepler and Maxwell-based GPUs. Now that the company has nearly completed the rollout and ramp up of its Pascal architecture Nvidia has finally managed to escape the relatively slow rate of growth it’s struggled with over the past few years.
Nvidia’s Strategy is a Winner
As it turns out Nvidia’s strategy of pandering to the PCMasterrace and going after the Cloud is clearly working out quite well for the company. Nvidia’s closest competitor, AMD, chose to invest heavily in the console gaming market to the detriment of its other products. More than anything else Nvidia’s financial results make it clear that PC gaming is a cash cow, now more than ever. To that end AMD has promised to renew its attempts to capture marketshare from Nvidia in the first half of next year. On a similar note, Nvidia and Nintendo announced this quarter that they would be making a console together just like SemiAccurate exclusively told you months ago. It seems the both of the partners in this discrete graphic duopoly are working to attack the opposites strongest market.
Given that Nvidia is sitting on six times as much cash as AMD and that AMD only spends about 69 percent as much as Nvidia on research and design while splitting that effort between many markets it’s hard to see much changing in terms of the competitive positioning of these companies. Right now Nvidia has about 70 percent lead over AMD when looking at performance per watt between similarly sized GPUs like GP104 and Polaris 10. Thus Nvidia has achieved near complete dominance in the high-end market as its gross margins this quarter demonstrate. This is a crown it will retain even in the worst case scenario for the next two quarters and probably for even longer than that.
It’s really hard to overstate what a milestone for Nvidia this quarter was. They broke their own records for revenue, gross margin, and outright profit. Things are looking up for the company in consoles, automotive, and HPC. To top it off sales are booming in Nvidia’s core business which is not something that many people would have predicted just a little while ago.S|A
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