Nvidia’s Next-Gen Chips Increase Speed and Price Targets
Jeeho Yun and Nikhil Gunderia
Financial institutions across the board have exhibited increased optimism in Nvidia, as the California-based tech company unveiled a new line of gaming graphic processors in its next-gen GeForce RTX 30xx series. Bank of America gives a street-high price target at $650, while Wells Fargo and RBC give a slightly less ambitious forecast of $605 and $610, respectively.
Nvidia has launched three new Ampere-based (the company's latest GPU architecture) products through yesterday’s GeForce Special Event: GeForce RTX 3070, GeForce RTX 3080, and GeForce RTX 3090.
Each of these three gaming chips is superior to that of its predecessor. The RTX 3070 is about 60% faster than the RTX 2070 while the RTX 3080 is ~2x faster than the RTX 2080. Not only do they provide faster processing speeds, price points on par with the previous generation. The RTX 3090, the most expensive and highest quality chip unveiled at Nvidia’s event, operates 50% faster compared to the TITAN RTX.
Besides unveiling its three next-generation gaming chips, Nvidia also has a range of new products including Nvidia Reflex, Omniverse Machinima, and Nvidia Broadcast. All of the products that Nvidia released at yesterday’s conference will enhance the playing experience for gamers and may be the next big thing in the gaming world.
Though Nvidia is excited about its new line of products, there are a few risks that investors should be wary of before going knee-deep in the stock. A major macroeconomic slowdown, such as the one we've seen as a result of the COVID-19 pandemic, “bodes negatively” for semiconductor companies, as revenue historically declines greater than the rate at which GDP does, according to analysts at BofA Securities. Not only do harsh macro trends mean bad news for Nvidia, but if people continue to move away from PCs and onto smartphones and tablets, the GPU business will inevitably feel the effects of that shift.
All in all, despite the risks that Nvidia may be exposed to, the confidence that investors have in the semiconductor company, at least for now, trumps the ambivalence that bearish shareholders may express.
Disclosure: At the time of publication, we have no positions in any of the securities mentioned in this article. We wrote this article ourselves, and it expresses our own opinions. We are not receiving compensation for creating this article (other than from TheStreet) and have no business relationship with any company whose stock is mentioned in this article.