Nvidia gaming card upgrade is big business, analysts say, as stocks head for more records

On Tuesday, Nvidia announced its next generation of gaming cards that are based on its Ampere architecture, following the May announcement of Ampere-based data center systems.

Bank of America analyst Vivek Arya, who has a buy rating, raised his price target to a high of $ 650 from $ 600. While some critics had argued two years ago that Nvidia’s Turing-based cards provided little Incentives to upgrade the previous generation of Pascal-based cards, Arya said Ampere offers a strong upgrade argument, which may result in 75% of players still using Pascal. cards based on the purchase of an Ampere card.

“Ampere adds the performance boost (4K at 60 frames / sec) for both traditional games and ray traced even traditional games that Turing often compromised, leading some Pascal gamers to forego the Turing upgrade. ”Arya said.

Wells Fargo analyst Aaron Rakers, who has a buy rating and raised his price target to $ 605 from $ 535, noted that the price of the Ampere upgrade offered a significant difference from the last two generations of GPUs. Nvidia.

“The new Ampere line is priced the same as the previous Turing GeForce line with GeForce RTX 3080 priced at $ 699,” Rakers said. “This compares with some reports that point to a potential increase in like-to-like; note that the older generation Turing (2018) and Pascal (2016) had price increases of $ 100 and $ 50, respectively. “

Interestingly, at the time of publication, Nvidia was offering its old Turing-based cards at prices similar to the updated ones. An Nvidia spokesperson declined to comment on whether the company planned to lower the prices of Turing cards.

Mizuho analyst Vijay Rakesh, who has a buy rating and raised his price target to $ 575 from $ 520, said Nvidia’s push to make its ray tracing technology more relevant in game titles Popular such as “Fortnite” from Epic Games and MSFT from Microsoft Corp. “Minecraft” positioned the company “well into 2021.” Ray tracing, which was introduced with Nvidia’s Turing-based cards, is the graphics card’s ability to generate realistic-looking lighting and shading in real time.

“We believe that the combination of a robust 3D rendering GPU platform powered by RTX and AI drives a step forward in its value proposition for developers and gamers and creates a deeper pit against competition from NVDA,” said Rakesh.

Cowen analyst Matthew Ramsay, who has a superior performance rating and raised his price target to $ 540, said the lack of a price increase from Nvidia showed just how competitive the GPU landscape is today.

“We believe Nvidia is aggressively pricing cards to ensure it maintains its dominant leadership in the gaming ecosystem and wallet engagement given upcoming new GPU releases. [Advanced Micro Devices Inc.’s
AMD,
-2.00%
] Great Navi line and new Sony / Xbox game consoles, ”said Ramsay. On Wednesday, AMD shares fell 1.7% to $ 90.60.

Of the 39 analysts covering Nvidia, 31 have buy or overweight ratings, six have retention ratings, and two have sell or underweight ratings. With 30 analysts raising price targets, Wall Street has an average target of $ 544.04 on the stock, up from the average of $ 491.39 after Nvidia’s strong earnings report two weeks ago, according to FactSet data.

The shares were up 147% for the year, compared to a 28% gain on the PHLX Semiconductor Index SOX,
+ 2.60%,
a 10% gain on the S&P 500 SPX Index,
+ 1.12%,
and a 34% gain on the high-tech Nasdaq Composite COMP index,
+ 0.67%.