NVIDIA(NVDA.O)：NVIDIA IS BUILDING AN ECOSYSTEM IN THE FIELD OF AI AND METAVERSE THROUGH DESIGNING GPU HARDWARE AND DEVELOPING CUDA + OMNIVERSE SOFTWARE

　　NVIDIA is far-sighted and actively developing software tool chains, trying to build an ecosystem in the field of AI and metaverse where have a vast market space in the future, in order to strengthen industry barriers by the binding of hardware chips.Compared to companies that mainly focus on chip design such as Intel and AMD, we believe that NVIDIA has a higher valuation since it’s no longer just a chip design company but forming an ecosystem in both software and hardware field. NVIDIA attaches great importance to expanding the use of GPU. In 2006, NVIDIA began to invest heavily in the development of CUDA, a software tool chain, after realizing the advantages of GPU parallel computing. NVIDIA allowed AI researchers to use CUDA to invoke the computing resources of GPU for free, making NVIDIA an important facilitator of deep learning training and inference in AI. Therefore, AI industry personnel have been using NVIDIA's hardware and software suite since the AI industry started to develop. NVIDIA has also applied a software and hardware combination model to new areas such as the Omniverse.We believe that in the field of AI and the metaverse, NVIDIA has the potential to become a supplier of general hardware platforms + software tool ecosystems, similar to the status of Qualcomm chips + Android operating systems in smartphones, with high industry barriers.
　　Due to richer usage scenarios of GPU architecture, we believe that NVIDIA's Total Addressable Market (TAM) will be 4 times as the existing traditional business. We　estimate that the TAM for its traditional consumer (game) business will be about USD100 bn, and that for the rapidly expanding data center is about USD150 bn. NVIDIA has huge room for the following fields: TAM for automotive chips which are gradually showing competitive advantages will be about USD300 bn; TAM for the cloud server will be about USD300 bn as it plans to form a product matrix of GPU, DPU and CPU; TAM of the Omniverse platform, which may make a splash in the metaverse era, will be around USD150 bn.
　　Earnings Forecast & Rating：As NVIDIA's revenues of data center (52% three-year CAGR), automotive(67% three-year CAGR) and professional display (51% three-year CAGR) grow rapidly, and profit margin of To B will be slightly higher than that of To C, we expect that its high PE ratio will dilute as net profit increases. By discounting FY25 net profit of $23.9 billion at an 8% discount rate to FY22 and taking into account the company's leading position and scarcity in emerging fields, we assign NVIDIA a 50X PE ratio and a target market cap of USD948.6 bn. We give Outperform rating to NVIDIA in our initial report with TP at USD374.
　　Risks: national policy risk; legal risk; technology risk; competitors risk.
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   【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。