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Naman Shukla
Naman Shukla
Articles (220) 

Is NVIDIA a Buy Going Into Earnings?

Given the success of NVIDIA’s latest graphics card, the company should deliver nice earnings report.

July 15, 2016 | About:

I have been an NVIDIA (NASDAQ:NVDA) bull ever since the stock was trading at just under $30. Since then, NVIDIA has shot up massively. While the stock’s valuation may be a bit too steep, it can move higher after the earnings report.

GTX 1060, NVIDIA’s next Pascal-based graphics card

NVIDIA recently launched new graphics cards GTX 1080 and GTX 1070, based on Pascal architecture. It seems like the company has played a smart move by launching these graphics cards that were primarily designed for high-end users as both the graphics cards have showed strong sales growth.

In contrast, NVIDIA’s foremost rival Advanced Micro Devices (NASDAQ:AMD) launched a new graphics card, Radeon RX 480, specifically for the mainstream market previous month. It was said that NVIDIA would lose its mainstream market to Advanced Micro Devices by launching high-end graphics cards, but the company is on its way to releasing its new graphics card GTX 1060 especially for mainstream market.

NVIDIA’s GTX 1060 features 1280 CUDA cores, considerably less than GTX 1080 and GTX 1070, and will run at a maximum boost clock of 1.7 GHZ. However, the company also claimed that it can be easily overclocked to 2 GHZ for advance performance.

Apart from these, GTX 1060 will comprise 6 GB of 8 Gbps GDDR5 memory. Furthermore, the company also detailed that the card will be available with a starting price of $249, whereas Founder’s Edition will be priced at $299. It is certain that GTX 1060 will prove to be a tough competitor with Advanced Micro Devices' Radeon RX 480.

Is Advanced Micro Devices' Radeon RX 480 working perfectly?

In 2015, Advanced Micro Devices lost almost every battle against NVIDIA and Intel (NASDAQ:INTC) in terms of GPU and CPU, respectively. Due to this, NVIDIA became the leader of graphics card industry accounting for around 80% market share. Advanced Micro Devices recently released Radeon RX 480 based on its latest Polaris architecture. Radeon RX 480 was priced at $199 and mainly designed for mainstream market.

Due to the loss suffered by Advanced Micro Devices in the past few years, the company was not able to spend massively on R&D and marketing in the GPU market. Moreover, the company faces tough competition from Intel as well as NVIDIA.

As an outcome, Advanced Micro Devices has constantly struggled to compete against NVIDIA and Intel in developing more power-efficient hardware. Advanced Micro Devices steered toward the inexpensive path of boosting clock speeds instead of advancing its architecture frequently. The company’s lower spending on R&D makes the RX 480 a tad bit inefficient, as it draws more than the rated power that can fry the PCIe slot.

Conclusion

While it looks like both the companies have delivered good products, I think only NVIDIA can sustain its rally going into the earnings season. Investors should continue holding NVIDIA.

Disclosure: I don't hold a position in any of the stocks mentioned in the article.

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