The above link is to Jensen’s keynote address. At the 3 hour mark is where the new products were announced. They basically launched 3 new GPUs called the RTX family. The lowest is priced at $499 and the highest at $999. Prior to this announcement their best gaming GPU, based on the Pascal GPU, was $1200. This is the biggest leap in performance in the company’s history and even the $499 version is A LOT better than the previous top end $1200 GPU. NVDA is moving fast and is distancing itself further from AMD. Will AMD’s GPUs ever be able to do real-time ray tracing? If not, they are screwed; AMD will get further pushed into the low end market causing their GMs and profitability to suffer.
Last week NVDA announced new GPUs, also based on the new Turing architecture, for the $250B visual effects industry (categorized and broken out by NVDA in the financial statements as their Profession Visualization business). This was announced at the SIGGRAPH conference.
Last week they also announced FY2019 Q2 results which sent the stock down.
Here’s how I see it:
NVDA is not slowing down how fast they are introducing products and advancing their technology. In fact, it seems to be accelerating. They are combining computing, ray tracing, and AI into a single GPU; to me this seems like 1 + 1 + 1 = 5 or 7.
Their 4 businesses are
a) data center: growing very fast
b) gaming: huge leap in new products which will go on sale on September 20 (in about 30 days). I think Q3 and Q4 will be huge for NVDA’s gaming segment. I think it will reaccelerate.
c) professional visualization: new products announced last week. I agree with Jensen that these new GPUs will change how special effects are done, how movies are made, how companies will
d) automotive: this segment is slowly growing but this segment will explode when autonomous cars
e) then there’s the future which will come fast (in a few years probably). anything that moves can use an NVDA brain. There will be millions of devices that need brains and they will be in the edge. This may be eventually be the biggest source of revenue and income for NVDA
The financial results in Q2 FY2019:
y/y eps growth: 92% (wow!)
1 yr eps growth: 79%
y/y revenue growth: 40% (lower due to low crypto: real growth is therefore higher)
1 yr revenue growth: 42% (lower due to low crypto)
After digesting the implications of the 2 keynotes from SIGGRAPH 2018 and Gamescom 2018 and the earnings results and conference call, my opinion is that reaccelerating is coming. I had sold some of NVDA position in the first half of 2018. I bought more shares today and intend to increase my position back to a 10% position from a current 9.1% position.
the previous top end $1200 GPU. NVDA is moving fast and is distancing itself further from AMD. Will AMD’s GPUs ever be able to do real-time ray tracing? If not, they are screwed; AMD will get further pushed into the low end market causing their GMs and profitability to suffer.
Not sure if NVDA will keep selling the GTX 1080Ti (was previously $1200) but if they do then the price will surely be less than than $499 which is the entry level GPU for AI and ray tracing. Now if the GTX 1080Ti was already better than AMD’s best GPU then who going to ever buy an AMD GPU for gaming??? Price cut from $1200 to below $499…where would that leave AMD? Poor AMD.
I don’t think we can say for certain how the RTX 2070 compares with the 1080 ti. Ray-tracing is an additional feature that takes a lot of the power of the new GPUs to create something admittedly fantastic. It’s uncertain what happens if you don’t use ray tracing. Will the ray-tracing cores actually be useful? We need the benchmark tests to see how they compare with ray-tracing off and if your monitor is not top of the range (e.g. if you’re not using 4k). Now, it might be fantastic. It’s a new architecture, so we can’t do an apples to apples comparison just using TFLOPs, but actually need real tests to compare.
I’m being deliberately cautious with this so I can only be pleasantly surprised when we do find out in late September/early October.
What is the current TAM of gamers with top of the range monitors or wanting to play the latest games with ray-tracing on, and who can afford the price-tags of the RTX? That’s the key question. For everyone else, the 1080 ti might still be much more than good enough.
The TAM? I don’t know.
But what I do know is that if you pre-ordered the RTX 2080 ti during the keynote speech, you’ll get it on September 20th. If you preordered it about 5 hours after they keynote finished, you’ll get it on October 8th. That seems pretty telling to me!
What is the current TAM of gamers with top of the range monitors or wanting to play the latest games with ray-tracing on, and who can afford the price-tags of the RTX? That’s the key question. For everyone else, the 1080 ti might still be much more than good enough.
The TAM? I don’t know. But what I do know is that if you pre-ordered the RTX 2080 ti during the keynote speech, you’ll get it on September 20th. If you preordered it about 5 hours after they keynote finished, you’ll get it on October 8th. That seems pretty telling to me!
Thanks for that info on the pre-orders. I think a blowout Q3 is possible/likely. Q3 ends at the end of October so it will include almost 6 weeks of GeForce RTX sales. NVDA will report Q3 on November 15th.
Regarding the TAM, I don’t know. What I do know is that when the high end gaming GPU price is cut, demand will increase. Before the top GPU was $1200. Now you can get a better GPU that will do real-time ray tracing for about 1/2 the price. The number of global gamers is increasing. Many gamers like to share their recordings so others can view their successes. They will want to show their successes with the best possible graphics. Only the NVDA GPUs will be able to generate the most realistic graphics from the game recordings (and while they are playing). This is no small differentiator. IMO, these RTX GPUs are going to be a huge success and I expect NVDA will post a very solid Q3 and Q4 (Q4 includes the holiday season). NVDA stock has not moved much in the past 6 months; I think between now and mid-February when NVDA reports Q4 FY2019 results, the stock could move up nicely. Anyway, that’s what I’m betting on…
I happened to be on Twitter during the keynote and saw that among the usual celebrity/political/sports dross, that Nvidia was trending–which was unusual to say the least. My first thought was “uh oh” , but then saw that it was the gamers and gaming industry types who were absolutely over the moon about the new GPU-- in a very ‘Apple during the Steve Jobs era’ kind of way.(I mean in terms of product buzz, not comparing the two businesses)
I agree with Chris and others that this has the potential to be a big plus for NVDA–September/October we will find out more, but I increased my stake a few percentage points. The crypto concerns to me seem a bit overdone. As Chris expertly laid out the other elements of the business, there is a lot going on at NVDA other than the crypto driver, which is the thing that tends to make the headlines in the financial press.
Something that comes to mind that no one has brought up is that in the movie/film industry, they use a lot of graphic processing power to render a scene with raytracing to create the CG (Computer generated) visual effects/scenes. A few years ago this would take many hours or even days to render. Im sure something like this technology would help that industry see return on their investments much faster and also make it more affordable to do high quality CG in a quicker turn-around time. You can easily google pixar ray tracing and you will find articles about ray tracing and how it has been a hurdle for CG movies
Despite the PR I was not that impressed with ray tracing, it seems to have limited usefulness, and it’s likely to take a year or so before games using it are available. I didn’t read all the specs and no independent tests are available yet but overall the new GPUs seem like a significant jump. My present Nvidia 1070 seems to be more than enough for present 2D games but hopefully the new ones will be worth paying for for VR and future gaming especially if/when we get 2nd or 3rd generation VR devices.
No doubt I will buying a new Nvidia GPU equipped PC in a year or two. Doing my part for sales…
I think it is great they have made such a huge technological advancement with the RTX chip. From an investor standpoint though…
If you have a top chip selling for 1200$ that people want, and you create one that is so much better, why would you sell it for 499-999$? Apple would never make a better MacBook and sell it cheaper. They make you pay because you want it! Don’t people want these chips? Why not increase the price if they are better and people will still buy them because they are the best!
This is the curse of chip companies. NVDA could be different, I own shares so I hope so. But when the next great thing gets sold at a cheaper price, the math only holds up for so long.
If you have a top chip selling for 1200$ that people want, and you create one that is so much better, why would you sell it for 499-999$?
Hey Gator,
I was just reading TMF’s article on Nvidia’s RTX Series, and it states the following:
“If [RTX] pricing seems higher than normal, that’s because it is. The GTX 1080 Ti launched at $699, the GTX 1080 at $599, and the GTX 1070 at $379. NVIDIA is adding between $100 and $300 to each of these new cards.”
Just found where I read the $1200 quote (in Gaucho’s post above)! Where is the discrepancy coming from? Did Nvidia raise their prices over time (seems counter intuitive, but I could be wrong)?
Are you sure it’s not from the spike in GPU prices due to crypto-currency mining? I believe prices have settled a fair amount in the past few months. I don’t think the 1080 was ever $1000+ initially.
The Titan X was the top of the line Pascal card that was priced at $1200.
So the RTX 2080 Ti Founders Edition matches the Titan X. Looks like the Founders Edition is only a bit more powerful than the regular version and more of a “premium” product. RTX 2080 Ti comes in at $999, so it is significantly more than the GTX 1080 Ti.
Overall NVDA is aiming to get people to move up a bit from GTX 1080 Ti to RTX 2080 Ti and pay more. As they innovate they are also getting people to spend more (they must know they have high demand considering the limit of 2 per person).
Kind of like how Apple has convinced people it is OK to spend $1000 on a phone when 10 years ago everyone wanted phones for free (subsidized). Gradually increase the prices as you introduce “must have” features and introduce higher end products so that people paying more still think they’re saving money buying the mid-range products.
Most gamers would be happy just to upgrade to a discounted GTX 1080, at least for now. Gradually when everyone gets 4k monitors, more games introduce ray tracing, and graphics continue to improve then people will need to upgrade to RTX.
As of now the game graphics still leave a bit to be desired at least when compared with the real time movies shown at SIGGRAPH. May be a couple years before consumer cards are able to handle games with that level of detail.
NVDA is executing as expected. Revenue may be lumpy based on product releases and not follow typical seasonality, so even YoY comparisons are difficult to assess. Unlike Apple they do not release new products every year, and I think Apple only started that because everyone was on 2 year upgrade cycles when the iPhone was first released.
Is Nvidia going to keep on making the older 1050-1080 line?
I don’t /know/ the answer, but I suspect that the OEM vendors already have “a pile” of those chips and can opt to keep making and selling those 1050/1060/1070/1080 cards if they see a market for them and can make a profit. Since the cost of the chips themselves has already probably been baked, I imagine those vendors (MSI, ASUS, etc.) will definitely use up their chip supplies and ride the “long tail,” selling the older generation cards for as long as they can.
Case in point: I own a high-end 1060, bought at launch time, and not too long ago (few months back) was helping a friend diagnose a problem w/ his PC (which turned out to be his ancient HP monitor dying). I was simply unwilling to take my primary PC apart to move my 1060 into his PC to test the card or put his 1050 in mine. I bought a low-end $30 1050 card for that purpose, and then relegated it to another PC for the kids’ gaming (Fortnite runs ok on it).