Why Did Nvidia Close At All-Time Highs On Tuesday?

Things are heating up in the chip maker’s rivalry with AMD, but Nvidia’s new gaming card release was enough to push its stock to record highs this week

Sept. 2, 2020

While the media might seem to think that Apple’s clash with Epic Games is the only current development in the gaming sector, another war has been brewing right under our noses. Recent gaming card releases from Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD) have further highlighted the growing rivalry between the pair. 

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Nvidia hits all-time highs

If any of my fellow gaming nerds are reading this, they might share my excitement about Nvidia’s new GeForce RTX range of cards that were unveiled yesterday. For those of you who are not fans of gaming but interested in Nvidia’s business, then you too should be excited. Based on its Ampere architecture, released in May to replace its Turing and Volta chips with a single platform, this new product has been described as “a beast” by Chief Executive Jensen Huang. 

These new cards build upon the company’s Turing architecture, which brought real-time ray tracing — the rendering of realistic-looking lighting and shading — to the forefront. When ray tracing was first introduced by Nvidia two years ago, its biggest criticism was a lack of available games making use of the technology. Fast-forward to now, and that is definitely not a problem, with the following titles just some of the blockbuster names soon to make use of the technology:

  • Minecraft
  • Call Of Duty: Black Ops Cold War
  • Fortnite
  • Cyberpunk 2077

The new RTX series will come in three payment tiers: the RTX 3070 ($499), RTX 3080 ($699), and RTX 3090 ($1,499). It is this last 3090 card that will be the real money-maker. It runs up to 50% faster and ten times quieter than Nvidia’s flagship Titan RTX, which last listed at $2,499. The Titan was a limited-release product which saw surprising popularity among filmmakers using 4K technology. These products will be released in mid-September and early October, meaning that Nvidia will have at least 6 weeks of sales before it closes out its fiscal third quarter on October 31.

This massive development is the gaming equivalent of Apple’s iPhone releases every September, and with the next series of Playstation and Xbox consoles coming this holiday season, it’s an exciting time to be invested in Nvidia. 


What about AMD?

Not to be outdone by its chief rival, Advanced Micro Devices quietly released its own array of gaming cards over the weekend. The AMD Radeon RX 5300, an entry-level gaming card, is a direct competitor to Nvidia’s GeForce GTX 1650 graphics card but will undercut its price at just $129. Also, according to the data shared by AMD, the RX 5300 is, on average, 38% faster than the GeForce 1650.

Despite its out-of-the-blue launch, investors still took notice, with the company’s stock jumping 8% since Monday, compared to Nvidia’s 5% rise in the same period. 

Both businesses have become leaders in the graphics processing unit (GPU) industry, leaving long-time industry stalwart Intel in the dust in recent years. AMD has actually taken the lead against Nvidia in the console market, becoming the GPU of choice for Sony and Microsoft

However, Nvidia is still a much larger company with a more than $320 billion market cap compared to AMD’s roughly $100 billion, while AMD’s 2019 revenue was $6.7 billion versus Nvidia’s $10.9 billion. Nvidia is also pivoting into the data center business, with this segment of the company overtaking gaming revenue for the first time ever in Q2. 

Both companies have soared in 2020, with Nvidia up 130% YTD compared to AMD’s 88% in the same period. It’s a great time to be investing in the semiconductor industry, and with these two at the forefront, don’t be surprised to see further growth before the year is out.

MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above. Read our full disclosure policy here.