Nvidia Unveils Two Graphic Cards

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( Trefis) -- Nvidia ( NVDA) has come out with two new graphics cards -- the GeForce GTX 680 for desktops and the GeForce GT 640M for notebooks.

We estimate that the discrete desktop GPU and discrete notebook GPU businesses constitute roughly 18% and 15% to Nvidia's value, respectively.

Since the discrete PC business is roughly one-third of the estimated Trefis value for Nvidia, the company will look to extend its technology lead over AMD ( AMD) and strike more partnerships with PC makers to include its discrete graphics cards, especially in Intel's ( INTC) processor-based computers.

See our complete analysis for Nvidia here.

According to some benchmark reports, Nvidia's new GPUs outperform AMD's new Radeon HD 7970 by quite a margin. Nvidia's new GPU, which is based on 28nm process.

The pricing is similar to the previous generation GPUs, implying that the average pricing may stay stable over the long term as Nvidia will look to undercut AMD to gain share. This means that the price increases may be absent despite an improvement in performance of subsequent GPUs.

However, this is Nvidia's best product and a major portion of its business is determined by how the bulk of its GPUs stack up against AMD. Assuming that the company replicates its performance lead in other GPU models as well, there is a possibility that it might gain some additional market share ahead of what we currently forecast.

Under an optimistic scenario where Nvidia can rise to and maintain a 70% share in both desktop and notebook discrete GPU markets, there can be further upside of about 10% to our current price estimate. Our price estimate for Nvidia stands at $21.26, implying a premium of about 40% to the market price.

Overall we believe that the shareholders are undervaluing Nvidia, and the company can unlock more value with its consistent push in discrete GPU market, Tegra-related revenue growth and potential inroads in PC microprocessor market.

Click here to find out how a company's products impact its stock price at Trefis.

Like our charts? Embed them in your own posts using the Trefis Wordpress Plugin.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

More from Technology

Deconstructed: Why Micron's Stock Has Exploded 11% in 13 Hours

Deconstructed: Why Micron's Stock Has Exploded 11% in 13 Hours

Pegasystems Founder Explains Why He Has One of the Hottest Tech Stocks Around

Pegasystems Founder Explains Why He Has One of the Hottest Tech Stocks Around

Experts Break Down GDPR Risks for Investors

Experts Break Down GDPR Risks for Investors

4 Billionaires Trying to Make Space Travel a Reality

4 Billionaires Trying to Make Space Travel a Reality

Facebook CEO Mark Zuckerberg Deflects Tough Questions From European Parliament

Facebook CEO Mark Zuckerberg Deflects Tough Questions From European Parliament