NVIDIA's $1,000 Beast Is Selling Out

With NVIDIA's latest $1,000 beast selling out, it's clear that the company's gaming GPU business is still quite robust.

Mar 31, 2014 at 8:00PM

Back in February, NVIDIA (NASDAQ:NVDA) launched a beastly $1,000 graphics card known as the GeForce GTX Titan Black. This card was the creme de la creme of PC graphics cards based on NVIDIA's highly efficient (and extremely powerful) GK110 architecture. While some balked at the notion of a $1,000 graphics card, the truth of the matter is that the company apparently can't keep them on the shelves, as predicted.


Source: NVIDIA.

Out of stock, the new catchphrase
It's really tough for gamers to get their hands on a Titan Black these days. On Amazon.com, they're three to five weeks backordered (or available for a 50%-60% markup from third-party sellers). On Newegg.com, the premier PC hardware online retailer, the cards are just plain "out of stock."


Source: Newegg.com.

Now, of course the chips that NVIDIA provides for these cards are absolutely massive at 7.1 billion transistors on a single piece of silicon. While TSMC's (NYSE:TSM) 28-nanometer process upon which this graphics chip is built is quite mature by now, the fact of the matter is that such big die are still much more difficult to build than their smaller brethren. This means that NVIDIA's HPC/workstation cards will get first dibs on the fully functional GK110s and the gamers will be next in line.

Proving the NVIDIA thesis
The fundamental NVIDIA thesis is that even though the low-end/OEM discrete GPU market seems to be contracting with the general PC market, the high-end gaming GPUs (which according to NVIDIA's analyst day made up 61% of the company's revenue base during the last fiscal year) market is growing enough to not just offset that decline, but is actually enough to drive mid-single-digit growth. The fact that NVIDIA can release a $1,000 graphics card for gamers and have them fly off the shelves is simply impressive and largely proves that NVIDIA's GPU business long term is going to be quite viable.

How about competitor AMD?
The only competitor to NVIDIA in the discrete GPU space is Advanced Micro Devices (NASDAQ:AMD). While AMD's graphics cards are also solid performers, the company has been losing market share for quite some time. According to Jon Peddie Research, NVIDIA gained PC graphics market share while AMD saw its share decline. Do note, however, that the outsized decline on AMD's part was probably driven more by share loss in combined CPU/GPU parts (known as APUs) than in discrete.


Apple's Mac Pro, powered by AMD's FirePro. Source: Apple.

The big problem for AMD is that not only does NVIDIA hold the lion's share of the discrete gaming GPU business (per Jon Peddie Research), but NVIDIA holds the vast majority of the high-end HPC and workstation cards. AMD has been vocal about attempting to gain share here, and the Mac Pro is often cited as a major design win, but it'll take more than the relatively low-volume Mac Pro to move the needle for AMD.

What's the takeaway? 
At the end of the day, it's clear that there will continue to be demand for ultra-fast graphics processing units for gamers. While some NVIDIA bears continue to cite the decline of the PC market as a reason to be bearish on the company in general, the truth of the matter is that the company's real money-making GPU businesses -- gaming and professional -- continue to see robust demand. While the steady growth in GPUs isn't enough to justify a higher valuation from here, this business will hold the line as the company expands into new territory with Tegra (mobile and automotive) and GRID.

Did you miss NVIDIA's run? 
Let's face it: Every investor wants to get in on revolutionary ideas before they hit it big. Like buying PC maker Dell in the late 1980s, before the consumer computing boom. Or purchasing stock in e-commerce pioneer Amazon.com in the late 1990s, when it was nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure play" and then watch as it grows in EXPLOSIVE lockstep with its industry. Our expert team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this eye-opening report.

Ashraf Eassa owns shares of NVIDIA. The Motley Fool recommends NVIDIA. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information