Shares of Nvidia (NVDA) are on the rise on Wednesday after the company unveiled its GeForce RTX 30 Series GPUs during a virtual launch event by Nvidia founder and CEO Jensen Huang. Following the news, several Wall Street analysts raised their price targets on the stock, with RBC Capital analyst Mitch Steves arguing that the announcement is a "notable positive" considering the chips' "wide range" and "reasonable" selling prices.
GEFORCE RTX 30 SERIES REVEAL: On Tuesday, Nvidia unveiled its GeForce RTX 30 Series GPUs, which "delivers the greatest-ever generational leap in GeForce history." The RTX 30 Series was unveiled during a virtual launch event by NVIDIA founder and CEO Jensen Huang, who also announced that Epic's Fortnite is turning on RTX real-time ray tracing, adding four ray-traced features "for a more immersive gaming experience."
"Today's launch of NVIDIA Ampere GPUs is a giant step into the future," said Huang. "The work of thousands of engineering years, the GeForce RTX 30 Series delivers our greatest generational leap ever. Nvidia RTX fuses programmable shading, ray tracing, and AI for developers to create entirely new worlds. Twenty years from now, we'll look back and realize that the future of gaming started here."
ANNOUNCEMENT 'A NOTABLE POSITIVE': Bank of America analyst Vivek Arya raised the firm's price target on Nvidia to $650 from $600, while keeping a Buy rating on the shares after the company unveiled its next-generation gaming graphics cards. The mainstream RTX 3080 and 3070 cards, which Nvidia claims will have the largest inter-generational performance boost, are priced $100 cheaper than speculated at $699 and $499, respectively, Arya noted. The analyst also pointed out that the price of the high-end 3090 card is 25% higher than the 2080 Ti it replaces at $1,499.
Meanwhile, Credit Suisse analyst John Pitzer also raised his price target on Nvidia to $620 from $530 and maintained an Outperform rating on the shares. The analyst highlighted that Nvidia has officially introduced multiple new products, including the RTX-30 series of gaming GPU's for DTs, Nvidia Reflex, Nvidia Broadcast, and Omniverse Machinima. Pitzer expects RTX-30 product cycle to support prolonged Gaming growth beyond the third quarter.
Keeping an Outperform rating on the shares, RBC Capital analyst Mitch Steves raised the firm's price target on Nvidia to $610 from $528. The analyst told investors that he sees the company's announcement as a "notable positive" considering the chips' "wide range" and "reasonable" average selling prices. Steves further noted that Nvidia's Gaming revenue should grow mid-single digits long-term, though he still sees its Data Center business growing the fastest this year. Wells Fargo analyst Aaron Rakers also raised the firm's price target on Nvidia to $605 from $535 following the news, while keeping an Overweight rating on the shares. Rakers added that he expects data center strength to continue and a positive gaming GPU product cycle.
Additionally, Benchmark analyst Ruben Roy increased his price target on Nvidia to $600 from $540, maintaining a Buy rating on the shares following the launch of the company's initial Ampere-based gaming GPU line-up. A key point Nvidia made at its GeForce RTX 30 series launch event is that the Ampere-based products represent the greatest ever generational leap in GPU performance, which, coupled with consistent price points compared to previous Turing products, should drive significant upgrades, said Roy, who is raising his fiscal 2021 and fiscal 2022 estimates to account for "modestly higher" gaming segment assumptions.
While the price points for the new cards are largely in-line with the Turing generation released in 2018, the product launch is a positive as the increase in performance has the potential to accelerate Nvidia's installed base refresh cycle, Goldman Sachs analyst Toshiya Hari told investors in a research note. The analyst believes the timing of Nvidia's Ampere introduction were in-line with investor expectations and that the news is unlikely to change sentiment on the relative competitiveness between Nvidia and AMD's (AMD) gaming graphics processing unit business. He raised his price target on Nvidia's shares to $585 from $528 and reiterated a Buy rating on the stock.
Mizuho analyst Vijay Rakesh also raised the firm's price target on Nvidia to $575 from $520, while reiterating a Buy rating on the shares after the company launched new Ampere "30-series" GPUs. The new GTX 3070/80/90 series drives two-times the performance versus the prior Turing generation with three cores, and priced "attractively" at $499-$1,499, similar to the prior Turing, Rakesh contended. The analyst believes Nvidia is positioned well into 2021.
WHAT'S NOTABLE: Over the weekend, AMD put the Radeon RX 5300 GPU graphics card on its website without any other announcement. The card is a competitor to Nvidia's GeForce GTX 1650 and undercuts it in price, Business Insider's Carmen Reinicke wrote.
PRICE ACTION: In Wednesday morning trading, shares of Nvidia have gained over 3% to $571.32.
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