Nvidia (NVDA) - Get NVIDIA Corporation Report faces challenges in the graphics market from players like Intel (INTC) - Get Intel Corporation Report and AMD (AMD) - Get Advanced Micro Devices Inc. Report, which are increasingly providing integrated graphics chips to PC makers that reduce the need for separate (discrete) graphics cards. One area in which Nvidia has a dominant position is the professional graphics cards market. There is a risk, however, that Nvidia's leading share will be eroded as integrated graphics cards become more powerful and if spending on high-end graphics cards, like those made by Nvidia, is curtailed due to broader economic concerns.
We currently have a
, about 16% above the current market price of $10.12. Below we highlight how
has trended in recent years and expectations for the future.
Professional graphics cards are purchased separately by professionals to get 3D graphics performance that is superior to the graphics cards that come installed in their PCs. Such cards appeal to professionals and firms involved in architecture, engineering and creative professions, such as advertising and design, which involve heavy graphics usage.
In the past, Nvidia pro graphics cards market share has increased from 70% in 2005 to 86% in 2009.
The average of forecasts for Nvidia's pro graphics market share created by Trefis members in the last week indicated a projected decrease from 85.6% in 2010 to 81.5% by the end of the Trefis forecast period, compared to the baseline Trefis estimate of a decrease from 86% in 2010 to 83% by the end of the Trefis forecast period.
The member estimates imply a downside of only 1% to the Trefis price estimate for Nvidia's stock. We expect Nvidia's pro graphics share to decline slightly over our forecast period, but not to revert to historical lows. An economic slowdown and resulting drop in spending would favor lower-priced cards and could hurt Nvidia's position in the pro graphics card market.
What do you think? Will Nvidia's market share in pro graphics cards return to 2005 levels? You can modify our forecast above to see how such a scenario would impact Nvidia's stock.
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Trefis Members constitute more than tens of thousands of users of the Trefis platform, inclusive of investors, financial analysts, and business professionals who use the Trefis platform to create their own models and price estimates.
is a financial community structured around trends, forecasts and insights related to some of the most popular stocks in the U.S.