Nvidia, Advanced Micro Devices continue to show strength in gaming, BofA says

Jan. 06, 2022 9:34 AM ETNVIDIA Corporation (NVDA), AMDTBy: Chris Ciaccia, SA News Editor15 Comments

Moscow, Russia - April 7, 2019: NVIDIA microchip on the motherboard

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  • Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD) appear poised to keep growingly strongly in gaming, as just 23% of Nvidia gamers have a GPU that is on par with the latest consoles, Bank of America said in a recent investor note.
  • Analyst Vivek Arya notes that 50% of Nvidia (NVDA) gamers are using a GPU that is more than five years old, while 70% of them don't have key ray-tracing capabilities, and just 14% of them have upgraded to the latest Ampere generation, compared to a typical upgrade cycle reaching 40% of penetration. Arya adds the biggest hurdle is that Ampere products are "completely sold out," with many selling for two to three times the MSRP on the secondary market.
  • "In our view, consumer willingness to buy graphics cards at inflated prices is a signal that NVDA still has plenty of room to grow ASPs even from higher Ampere levels," Arya wrote in the note. He added that Ampere's average selling price of $482 is about 15-75% above prior Turing generations and "well above" the average of other Nvidia products between $200 and $300.
  • Comparatively, Advanced Micro Devices (AMD) "Big Navi" products sell between $299 and $399, well above previous AMD products that retailed for $150 to $200.
  • "We reiterate Buy ratings on NVDA and AMD on strong and nascent gaming cycles, with new products and further ASP tailwinds," Arya wrote in the note.
  • AMD (AMD) shares are up 1% to $137.53 in early Thursday trading, while Nvidia (NVDA) was slightly higher at $277.73.
  • Arya notes that Nvidia (NVDA) has gained market share for Steam gamers, accounting for 76.8% of the market, while AMD (AMD) is down to 14.5%, down 94 basis points month-over-month.
  • On Tuesday, Nvidia (NVDA) and AT&T (NYSE:T) announced they were teaming up, letting AT&T subscribers get access to Nvidia's GeForce streaming gaming service.
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