NVIDIA Rg (NVDA US)

Global Markets Comment

Nvidia just announced the launch of Ampere based gaming cards kicking off a new product cycle in gaming. Ampere can deliver roughly double performance of their predecessors RTX 2080 Ti. Nvidia also announced RTX3090 which UBS thinks will compete at the highest end of the stack RTX-Titan. UBS estimates on Nvidia is above street, and still see some room for multiple expansion on a relative basis as the RTX announcements kick off the second leg of the Ampere product cycle (Gaming & Data Center), still somewhat unique amongst its large cap tech peers. We raise our PT to $625 and maintain Buy.

Performance since inception*

Company Profile

NVIDIA Corp. designs and manufactures graphics processing units, add-in boards, and related low-level software. Its Graphics Processing Unit segment includes sales of the company's GeForce discrete and chipset products for high end video games and professional graphics workstations, and the company's Tesla Accelerator cards for data center customers. The Tegra Processors segment provides processors that enable embedded computer vision applications in automotive video surveillance end markets, as well as deliver multimedia experiences on mobile gaming platforms, while consuming minimal power.

Price History 1 year

Investment Case

Nvidia has been benefiting from its cloud-computing data center and current generation gaming products from Covid-19 stay-at-home orders. UBS believes the Ampere launch will be strong on both the gaming and data center side and with typical gaming and data center product cycles lasting 2-3 years we move to 1Std above the 3-yr historical average PE of Large Cap Growth comps to tune out any near term stock volatility. As the competition for Ampere is very limited UBS believes this warrants 1Std above the average due Nvidia's current market positioning for Ampere in gaming and data centeri markets.

Price History 5 years

Risk in Investment Case

NVIDIA company-specific risks include: 1) competition from AMD in graphics processors and professional visualization products, 2) intense competition in ARM-based applications processors, 3) emerging competition from Intel with its many-integrated core Knights processor family. In addition, NVIDIA faces the semiconductor sector risk.

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