Nvidia Analysts: Ampere-Based Gaming GPUs Are 'Compelling Upgrade'

NVIDIA Corporation NVDA unveiled new gaming GPUs Tuesday based on the Ampere architecture.

The Nvidia Analysts: BofA Securities analyst Vivek Arya reiterated a Buy rating on Nvidia and increased the price target from $600 to $650.

Raymond James analyst Chris Caso reiterated an Outperform rating.

Needham analyst Rajvindra Gill maintained a Buy rating and $600 price target.

Mizuho Securities analyst Vijay Rakesh reiterated a Buy rating and increased the price target from $520 to $575.

KeyBanc Capital Markets analyst Weston Twigg maintained a Sector Weight rating.

BofA Says Ampere Gaming GPUs Will Drive Upside: The main takeaway from Nvidia's Ampere gaming event is that the mainstream RTX 3080 and 3070 cards are priced at $699 and $499, unchanged from the prior generation Turing versions, and each $100 cheaper than estimated, BofA's Arya said in a note.

The $1,499 pricing of the high-end 3090 card is 25% higher than the 2080 Ti that it replaces, the analyst said. 

Ampere adds a performance boost, both for traditional and ray-traced games, the analyst said. The cards will be manufactured on the Samsung 8nm process instead of Nvidia's main foundry Taiwan Semiconductor Mfg. Co. Ltd. TSM, he said. 

Arya sees the Ampere gaming cards as driving a solid replacement cycle for the nearly 75% of the Nvidia deployed base that is still on Pascal or prior-generation cards.

The gaming cards should also drive upside to very conservative consensus year-over-year gaming segment growth estimates of 15% and 8%, respectively, for calendar years 2021 and 2021, the analyst said.

NVDA's time-to-market advantage in ray tracing will likely benefit from the launch of similar features and associated gaming titles for upcoming Sony Corp SNE and Microsoft Corporation MSFT consoles, he said. 

See also: Why BofA Has The Street's Highest Nvidia Price Target Ahead Of The Q2 Print

RayJay Sees Big Upgrade Opportunity: Only about 20% of users are on 20-series cards, leaving a large installed base with older cards, RayJay's Caso said in a note, citing Nvidia.

With the 30-series promising about two times improvement versus the prior generation, and solid gaming demand during the pandemic, the analyst said he sees a good incentive for upgrades.

The gross margins for 30-series GPUs at the same price point is expected to be lower than the gross margins for similar 20-series products, he said. 

The upselling opportunity to a higher price point is strong given the higher performance of the 30-series, the analyst said. 

"Coupled with strong underlying gaming demand driven by COVID-19, we do expect the 3080 to represent a compelling upgrade for consumers, and expect that product cycle to drive gaming growth for the next several quarters."

Nvidia Takes Significant Generational Leap: Nvidia's new gaming GPUs include three dedicated processors with 28 billion transistors, delivering two times the performance and 1.9 times the power efficiency over Turing-based GPUs, Needham's Gill said in a note.

The new GPUs include three cores: a programmable shader, an RT core to accelerate ray-tracing and a Tensor core, which powers graphics AI DLSS technology.

Each works concurrently to provide superior performance with less power consumption and energy efficiency, the analyst said. 

The size of the gaming market is enormous, with 200 million live streamers along with 500 million users on esports platforms worldwide, he said. 

"We believe the 2nd Gen RTX 30 Series GPUs will ultimately be available on all these global gaming platforms and will spur a significant upgrade cycle in the gaming segment (43% of sales)." 

Why Nvidia Is Well-Positioned Into 2021: The new Ampere 30-series GPUs with 3D rendering gaming engines that extend ray-tracing capabilities with an AI Tensor core offer gamers and game developers more performance and flexibility, and create a deeper moat versus the competition, Mizuho's Rakesh said in a note. 

"With a 500M eSports audience, 100M GeForce gamers and strong adoption with Fortnite/Minecraft/Call of Duty titles, we believe NVDA is positioned well into 2021." 

New GPUs Positive For Nvidia, KeyBanc Says: The new Ampere-based, second-generation RTX GPUs set for launch this fall are  impressive, KeyBanc's Twigg said in a note. 

The analyst sees the new product launch as a positive for Nvidia, likely meeting or exceeding already-high expectations.

Although the long-term opportunity is compelling, KeyBanc said it remains sidelined on Nvidia due to valuation.

NVDA Price Action: At last check, Nvidia shares were rising 3.38% to $571.50. 

Related Link: Nvidia Q2 Roundup: Analysts See 'Only Perpetual Growth Story In Semis,' Premium Valuation

Photo courtesy of Nvidia.