- By Shudeep Chandrasekhar
One of the biggest reasons for NVIDIA's (NVDA) explosive growth in the last few quarters has been the company's datacenter and auto segments posting solid gains. The datacenter group (DCG) has grown a massive 109.72% during the second quarter compared to last year, while the auto segment revenues climbed 67.61% during the same period. The additional revenue NVIDIA was able to earn out of these two segments propelled the company to post over 20% growth for the quarter.
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But where is that growth coming from and how does NVIDIA stand to gain from an evolving tech landscape? To understand that, we need to look into artificial intelligence as a viable industry segment.
In an earlier article called " NVIDIA: Where Will Real Growth Originate," I covered a different side of its future growth drivers. In today's piece, let's look at what AI can do for the company.
The rise of Artificial Intelligence (AI)
As the cloud industry continues to show significant growth led by Amazon (AMZN), Microsoft (MSFT), IBM (IBM) and Google (GOOG), the race for artificial intelligence supremacy is now heating up. It is not just the cloud industry players, but even companies like Facebook (FB) that are relying on artificial intelligence to power their products and services. At the heart of this transformation is deep machine learning, which consists of neural networks that can be applied to practical applications such as speech recognition, natural language processing, cognitive functionality and so on.
A good practical example for AI is Apple's Siri, the well-known virtual assistant available since the release of iOS 5 in October 2011. Today's Siri is far more cognitive and intelligent than it was five years ago because it's constantly learning by listening to us, interpreting our questions and finding the most relevant answers. But more important is the fact that such artificially intelligence systems are able to bring efficiency into daily processes. For example, Google's Deep Mind project achieved a 40% reduction in the amount of electricity needed for cooling their data centers, resulting in 15% worth of savings on power consumption.
There are plenty of ways in which AI can help companies internally. And nearly all the tech majors are racing to get that extra edge with their own products. On the one hand there are tech majors like Apple and Amazon beefing up their own AI portfolios; on the other, companies like IBM are using AI in the form of Watson to empower their partners and clients in diverse areas such as self-driving vehicles and health care . Either way, these are exciting new revenue streams for these companies.