Nvidia, AMD Estimates Lowered At RBC Capital On More Cautious Gaming View

RBC Capital analyst Mitch Steves lowered his price target on Nvidia (NVDA) to $200 from $230 and also lowered his FY19 revenue forecast on Advanced Micro Devices (AMD) to $7.29B from $7.41B.

The analyst says the revisions reflect his observation of a reduction in average selling prices for GPUs of both companies in the secondary market, particularly for Nvidia's GTX 1070 gaming chip. Steves warns that the company may not be able to discern whether the lower prices come as a result of reduced demand in gaming or cryptocurrency related activity, but states that his expectations for Gaming sector are "conservative".

The analyst also expects both Nvidia and AMD stocks to remain range bound until the air-pocket in gaming has passed over the near term. Longer term, Steves keeps his Outperform rating on Nvidia amid the sales mix shift toward Data Center revenues, which is seeing traction with the expected annualized growth. For AMD, the analyst also maintains an Outperform rating stating that its long-term investment story remains unchanged.

In Q1, Steves sees AMD catalysts in the form of a new server product with competitive performance and price relative to the current Intel (INTC) offerings. 
 

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