Nvidia (NVDA): 7 Reasons Why Next-Gen Turing’s GeForce Gaming Launch Is Potentially Underestimated
Today GPU and AI giant Nvidia (NASDAQ:NVDA) unveiled its new GeForce RTX 2000 series of graphics cards at Gamescom in Germany. The RTX 2070, 2080 and 2080 Ti will be the first consumer-level graphics cards based on Nvidia’s next-generation Turing architecture, which the company announced earlier this month at the SIGGRAPH computing conference.
B.Riley FBR’s top analyst Craig Ellis sees seven reasons why GeForce Turing may be underestimated in terms of financial performance potential by the sell side and buy side:
- Atypical performance gains on par with Pascal’s mid-2016 launch which catalyzed significant multi-quarter upside to investor expectations.
- Meaningful NVDA branded Founders Edition gaming card sales potential as NVDA’s finished product releases into a market with pent up demand while third-party product works through two-to-four weeks of qualifications, validation, and other testing, with a 2x ASP benefit.
- A 10-20% ASP boost on card reseller sales and perhaps more to compensate for performance-enabling larger GPU die-sizes, increased DRAM content, and new software and system goodies
- Dramatic install base turnover potential since 65% still use pre-Pascal cards.
- Robust ecosystem support from known gaming companies with ray tracing enabled title releases and an expanded competitive moat with new technology.
- Becalmed F2Q19 on-hand inventory concerns (+30% Q/Q) with a major product cycle kick off now visible.
- Decreased risk CY17&18’s crypto purchases can leak back into the market following tanking crypto pricing to befoul the gaming card market given an absence of ray tracing capability.
Net net, Ellis reiterates a Buy rating on Nvidia shares, with a price target of $300, which implies an upside of 23% from current levels.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Craig Ellis has a yearly average return of 32.9% and a 71% success rate. Ellis has a 114.1% average return when recommending NVDA, and is ranked #9 out of 4856 analysts.
Out of the 32 analysts polled in the past 12 months, 23 rate Nvidia stock a Buy, while 9 rate the stock a Hold. With a return potential of 19%, the stock’s consensus target price stands at $291.22.