(Bloomberg Opinion) — For all those who cite Intel Corp.’s troubles as symbolic of the U.S. semiconductor industry’s decline, here are two heartening words: Nvidia Corp.
On Tuesday, Nvidia — a red-hot maker of chips for video games, artificial intelligence and cloud computing — proved again that it is way ahead of its rivals in terms of innovation and performance. The Silicon Valley-based company announced a lineup of three new gaming graphics cards based on its latest “Ampere” chip architecture, saying they will deliver up to double the performance of its prior offerings in the “greatest generational leap” in its history. Prices for the new products range from $499 to $1,499, with two due to come out later this month and the third to be released in October. All in all, the news was enough to send Nividia’s shares up more than 3%.
Nvidia management has already signaled its confidence for its new gaming-card offerings. “This may very well be one of the best gaming seasons ever,” Chief Executive Officer Jensen Huang said during an investor conference call last month. The executive is right to be optimistic because demand for Nvidia’s lineup will benefit from a number of gaming industry developments. First, new titles such as Microsoft Corp.’s recently released Flight Simulator 2020 require more graphics horsepower than current chips can provide. Further, the release of the next-generation consoles from Microsoft and Sony Corp. later this fall will broaden the base of hardware that can run ray-traced enabled games – a technology pioneered by Nvidia that offers stunning, much improved lighting effects. The company said Tuesday hundreds of games with ray-tracing are currently under development.
Even before Tuesday’s launch, Nvidia had been thriving as its cloud-computing data center and current generation gaming products have benefited from Covid-19 stay-at-home orders. The company’s market value has more than doubled year to date to roughly $340 billion and it is now worth more than its two main rivals – Intel and Advanced Micro Devices Inc. – combined.
Nvidia’s run may be just getting started. In March, I wrote how investors shouldn’t underestimate the potential of its next-generation “Ampere” architecture, predicting the increase in performance from the new chips may lead to a series of positive earnings surprises. That’s been the case already, with Nvidia posting a couple of better-than-expected quarters on the back of its new data-center products.
Tuesday’s impressive launch likely means there are many more quarters of strong financial results ahead. It’s going to be a good holiday for both PC gamers and Nvidia, America’s new chip leader.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Tae Kim is a Bloomberg Opinion columnist covering technology. He previously covered technology for Barron’s, following an earlier career as an equity analyst.
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