Microchip shortages continue to put the squeeze on growth opportunities across swathes of industries around the world. Yet the Blue Whale Growth Fund (BD6PG78) continues to see long-run value in the sector, with Nvidia emerging as one of the fund’s top 10 stakes at the end of July having made its initial investment as recently as June this year.
Stephen Yiu, who is lead manager of the Blue Whale Growth, believes Nvidia is helping to accelerate the evolution of artificial intelligence with silicon chips that power the next phase of computing.
Nvidia is a $492 billion Nasdaq-listed semiconductor designer best-known for providing advanced microchips for graphics-heavy computer gaming, or graphic processing unit cores. But the explosion of cloud computing in recent years has seen Nvidia’s premium processors increasingly adapted by the major cloud service providers, such as Amazon Web Services, Google Cloud Platform and Microsoft Azure.
DATA SPEED KEY
The capacity for Nvidia’s chips to process vast amounts of data quickly now means the company’s technology has become the gold standard for running apps and processes in the Cloud.
And Yiu believes that there are other applications that Nvidia is beginning to tap into. ‘We believe Nvidia’s opportunity lies at the confluence of three major secular trends over the next decade - artificial intelligence, augmented reality and 5G - all three of which drive increasingly higher demands on processing power,’ the manager says.
Nvidia reported record revenue for the first quarter to 2 May 2021 after seeing an 84% jump year-on-year and 13% higher quarter-on-quarter. The company posted revenue of $5.66 billion with record revenue from the company’s Gaming, Data Centre and Professional Visualization platforms.
Diluted GAAP earnings more than doubled (+106%) to a record $3.03, or 31% from the previous quarter.
Nvidia is in the process of buying ARM, the former UK listed microchips design firm. The company's stock has rallied more than 50% so far in 2021.
You can find out more about the Blue Whale Growth Fund and what else is in its top 10 holdings by reading our recent feature here.
DISCLAIMER: Author Steven Frazer has a personal investment in Blue Whale Growth
