What does the king of entertainment have to do with the semiconductor universe? One bull believes that movie-making master Steven Spielberg’s next film Ready Player One, coming out in 16 days, is primed to be a “catalyst” for Advanced Micro Devices, Inc. (NASDAQ:AMD) and NVIDIA Corporation (NASDAQ:NVDA).
The movie is based on a 2011 novel set in 2044, where a virtual escape world exists: OASIS; a world where people can interact through avatars.
Jefferies analyst Mark Lipacis notes that whether initial sales forecasts are small-scale, to put it bluntly, “we’re not sure it matters.”
Wondering if Spielberg will be the “top 2018 salesperson of NVDA and AMD GPUs,” the analyst reiterates a Buy rating on AMD stock with a $19 price target, which implies a close to 64% upside from current levels, while maintaining a Buy rating on NVDA stock with a price target of $300, which implies a just under 20% upside from current levels. (To watch Lipacis’ track record, click here)
This dystopian film “will drive sales of VR headsets that require high-performance GPUs from NVDA and AMD,” predicts the analyst.
Moreover, “The opening weekend ticket sale projections we’ve seen range from $35-to-$60 million, which would pale in comparison to the Black Panther, which came in around $200 million – the 5th highest opening weekend in history according to ‘Boxofficemojo.com’. We note that the early OW projections for Black Panther were ~$85 million. We also think that Ready Player One has the potential to appeal to a electronics game savvy audience that is motivated to have a more immersive experience,” continues Lipacis.
In terms of the scope of virtual reality, the analyst notes that high-end graphics processors are needed here, and this demand aligns with his parallel processing argument.
Ultimately, “We observe that a lot of the demand for increased compute cycles is becoming parallel in nature, like neural networking, gaming, virtual reality and blockchain/ cryptocurrency mining,” Lipacis concludes on a note of confidence for both memory chip giants and GPU prospects ahead.