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ARK Disrupt Issue 87: August 14th, 2017 https://ark-invest.com/research/ark-disrupt-issue-87

chart of NIVIDIA quarterly OEM Revenues May 2014-August 2017

This week NVIDIANVDA delivered strong second quarter results: revenue grew 56% to $2.2 billion, boosted by strong gaming and data center sales. The real surprise though was in its original equipment manufacturer (OEM) segment. For more than two years, NVIDIA’s OEM business has been in decline, following the trend of the PC industry and the unwinding of IP royalties from Intel. In the second quarter, however, OEM sales jumped 54%. According to CEO Jensen Huang, cryptomining accounted for roughly $150 million, more than all of the growth of the division, as GPUs are used to ‘mine’ cryptoassets like ether. When asked about the long term opportunity, Jensen said:

Cryptocurrency and blockchain is here to stay. The market need for it is going to grow, and over time it will become quite large. It is very clear that new currencies will come to market, and it’s very clear that the GPU is just fantastic at cryptography.

Up until this quarter, NVIDIA has been conservative when talking about the cryptomining opportunity. This change of tone and the new cryptoboards it launched in June suggest that now NVIDIA is taking this business seriously…as it should.  Cryptomining, like deep learning, is a greenfield opportunity, and the GPU’s mix of high performance, fast local memory, and programmability makes it uniquely suited to the task.

As a side, the addressable market for GPUs continues to expand, as cryptomining joins the ranks of gaming, computer aided design, scientific computing, artificial intelligence, and autonomous driving.  NVIDIA is to this age what Intel was to the computing age.

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ARK’s statements are not an endorsement of any company or a recommendation to buy, sell or hold any security. For a list of all purchases and sales made by ARK for client accounts during the past year that could be considered by the SEC as recommendations, click here. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list. For full disclosures, click here.

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Fred Pye

Frederick T. Pye

CHAIRMAN, CHIEF EXECUTIVE OFFICER & DIRECTOR

Frederick T. Pye is the Chairman, Chief Executive Officer and Director of 3iQ Corp. He is also the Chairman and Director of 3iQ Digital Holdings Inc. Mr. Pye is recognized for creating and promoting creative and unique investment products for the investment industry.

Mr. Pye has managed private client portfolios with Landry Investment Management and various other investment dealers. Prior to this Mr. Pye was Founder, President & Chief Executive Officer of Argentum Management and Research Corporation, a company dedicated to managing and distributing quantitative investment portfolios including the first long-short mutual fund in Canada.

He was also Senior Vice-President and National Sales Manager of Fidelity Investments Canada and an integral part of the team that saw assets rise from $80 million to over $7.5 billion in assets under management during his tenure. He also held various positions with Guardian Trust Company, which listed the first Gold, Silver and Platinum Certificates on the Montreal Exchange.

Mr. Pye obtained a Masters in Business Administration from Concordia University.