Why NVIDIA Killed It in 2017

Graphics processing unit (GPU) maker NVIDIA(NASDAQ: NVDA) delivered very strong performance in 2017. Throughout the year, NVIDIA made tremendous gains across its three biggest growth markets -- gaming, data center, and automotive.

NVIDIA grew trailing-12-month revenue 46% year over year through the fiscal third quarter ending in October. Margins expanded as well, boosting earnings per share 111% for the same period. This fueled an 81% increase in the stock price for the year.

Read on for a summary of key developments in 2017 and what to expect in 2018.

Desktop PC with a monitor displaying a game.
Desktop PC with a monitor displaying a game.

IMAGE SOURCE: NVIDIA.

NVIDIA remains the leader in gaming

Selling GPUs to PC gamers is still NVIDIA's largest business, making up 57% of trailing-12-month revenue, and Team Green continues to dominate this market. The company controlled more than 70% of the discrete GPU market through Q3 2017, according to Jon Peddie Research. NVIDIA saw gamers flock to its Pascal-based GPUs, driving revenue for the segment up 45% year over year for the trailing-12-month period through the fiscal third quarter.

NVIDIA introduced two GPUs for gamers last year that filled out what was already a strong offering. In the spring, NVIDIA launched the GTX 1080 Ti as its most powerful gaming graphics card. In the fall, NVIDIA strengthened its lineup heading into the holidays with the GTX 1070 Ti, which offered exceptional performance for the price.

Advanced Micro Devices(NASDAQ: AMD) gained a few points of market share on NVIDIA during Q2 after releasing its new Vega line of GPUs. This created uncertainty about whether NVIDIA could maintain its dominance, but that concern quickly ended when reviews showed AMD's Vega GPUs not offering the advantage many expected in benchmark tests against NVIDIA's GeForce 1080 Ti.

During Q3, NVIDIA regained the market share it lost to AMD in the previous quarter, according to Jon Peddie's latest research report. This means that even before the release of the 1070 Ti, NVIDIA was already regaining momentum heading into the holiday quarter. This could foreshadow a big quarter for NVIDIA's gaming segment when the company reports its fiscal Q4 financial results.

NVIDIA maintains leadership in fast-growing markets

NVIDIA made great strides last year in positioning its DRIVE PX car computer as the chip of choice for makers of driverless cars. Earlier in the year, NVIDIA added to its impressive list of partnerships -- which includes just about every major car manufacturer in the world -- with ones from Toyota Motor and two of Europe's largest auto suppliers, ZF and Bosch.