Thesis Summary

Dominant GPU company that's front-and-center in the AI revolution. Main threats are AMD and FPGAs but should carve out a space in markets beyond Gaming and data-centers like Autonomous Vehicles and Virtual Reality.

Competitive Advantage: The Castle

• Core Competency? Graphics Processing Units (GPUs) for Gaming and AI Computing.
• Products: Better or Cheaper? Better. Improving GPU’s and making them more AI-friendly.
• Evidence: Growth? Revenue growing at 40%-plus. EBITDA margins expanding.

Durability of Competitive Advantage: The Moat

• Competition/Threats? AMD for GPUs. Xilinx/Intel for FPGAs. And ASICs.
• Protection? Complexity, IP rights, and CUDA – Nvidia’s software stack for GPUs.
• Cash Flow Resiliency? Resilient. Common Architecture and CUDA extend product cycle.

Management Quality: The Generals

• Strategy & Action? Positive. Founder Huang focused on the right end-markets.
• Financial Productivity? High. ROE > 50%, due to high margins.
• Sustainable Free Cash Flow? ***Redacted