VR World

New Tegra Strategy Drives Nvidia's Earnings Upwards

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Re-focusing Tegra’s strategy away from smartphones has appeared to pay-off for Nvidia, as the company’s profits climbed 33% compared to the same quarter last year on strong growth in its Tegra as well as datacenter and cloud divisions.

For the second-quarter of its fiscal year Nvidia reported net income of $128 million on revenue of $1.1 billion, compared to a net profit of $96.4 million for the same quarter last year. Of particular interest in Nvidia’s quarterly report was the dramatic increase in revenue from its Tegra division. Once the sick man of the company’s various business units, the Tegra division reported a 200% increase in revenue from the same quarter last year coming in at $159 million compared to $53 milllion.

“We had a great quarter with strong gains in each of our three growth areas—Gaming, Datacenter & Cloud, and Mobile,” said Jen-Hsun Huang, the company’s president, said in a statement. “Our Tesla datacenter business is in high gear, benefiting from strong demand from cloud service providers, and our new SHIELD tablet is generating considerable excitement. ‎ Nvidia’s accelerating growth stems directly from investments in extending our visual computing leadership to the mobile-cloud revolution.”

The hardware wins that drove the growth in Tegra have largely come from infotainment systems in high-end cars from the likes of BMW and Audi. Last month Nvidia released a follow-up to its Shield portable gaming system called the Shield Tablet, but it’s unclear now if this will be the breakthrough Nvidia needs to make the Shield a competitive handheld gaming platform.

While Nvidia’s Tegra was the bright spot of this quarter’s earnings, the company’s consumer GPU business declined by 2% during the quarter. This follows an overall trend in the market of slackening demand for new GPUs by gamers, as the market lacks games that will push current GPUs to their limits. AMD was partially able to dodge this bullet because of the efficiency of its GPUs in mining cryptocurrencies, but Nvidia has had no such luck.

Nvidia is currently trading at $17.46 on the NASDAQ.