Nvidia (NVDA 5.93%) recently reported yet another round of amazing quarterly growth. Still riding the artificial intelligence (AI) adoption wave, its Q1 top line improved to $81.6 billion, up 85% year over year.
Lost in all the bullish noise, however, is that Nvidia isn't just an AI hardware company. Although data centers now account for more than 90% of its revenue, it still operates another division it (loosely) calls "edge computing," which saw 29% year-over-year sales growth of its own last quarter.
And this has bullish implications for rival chipmaker Qualcomm (QCOM 10.98%).
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What is edge computing?
What's edge computing? It depends on who you ask. Broadly speaking, though, this is just computing work that's done somewhere between end users and data centers. Connected self-driving cars, smart utility meters, wearables, computer-optimized industrial factories, and smart homes are examples of edge computing, all of which require some level of unsupervised computer processing. If you've ever heard the term "Internet of Things," edge computing is what was in mind when that term first started circulating a couple of decades ago, before the necessary technology was actually available.
It should be noted that much of what Nvidia's edge computing arm does barely qualifies as such; it includes personal computers and video gaming in this mix. It also -- rightfully -- includes robotics, autonomous vehicles, and optimized factories.
Great. But what's this got to do with Qualcomm?
Qualcomm is taking aim at the exact same opportunity
You may know it best as a mobile telecom name. But Qualcomm is an up-and-coming edge computing specialist, too, and arguably better positioned to capitalize on the opportunity.
You can't tell with just a passing look at last quarter's overall numbers. Dig deeper, though. Qualcomm manages a division it plainly calls Internet of Things, which produced 9% revenue growth to make up nearly 20% of the company's total business. And like Nvidia, Qualcomm's edge computing arm is working on automotive driver assistance, wearables, and factory optimization.
It matters simply because there's so much growth potential ahead for this business. Precedence Research suggests the worldwide edge computing market is set to grow at an average annual pace of 27% through 2035, when it could be worth a little over $6 trillion per year.
NASDAQ: QCOM
Key Data Points
And there's little doubt Qualcomm intends to win at least its fair share of this growth. As CEO Cristiano Amon commented at Davos earlier this year, "I have this view that at the end of the day, the winner of the edge is going to be the winner of the AI race."
Given Qualcomm's existing leading position within the mobile, small electronics, and remote high-performance computing space, it's conceivable that it could end up being bigger than Nvidia within this sliver of the chip market.
Nothing to dismiss
Don't misread the message. Nvidia is a tough competitor in any market it operates in. Qualcomm will need to earn whatever business it wins.
The fact that Nvidia continues to develop technology on this front, even though it clearly doesn't need to right now, speaks volumes about what it sees for edge computing in the foreseeable future. Qualcomm is simply addressing the same opportunity, and is perhaps better equipped to do so.
