AMD and NVIDIA Should Benefit From Intel's and Samsung's 4K Push

As Intel and Samsung drive even higher resolution displays into lower price points, graphics chip makers AMD and NVIDIA should benefit nicely.

Jun 7, 2014 at 4:00PM

At Computex 2014, Intel's (NASDAQ:INTC) Kirk Skaugen talked about how Intel is teaming up with Samsung (NASDAQOTH:SSNLF) to try to drive the prices of 4K monitors (that is, displays with 3840x2160 pixel resolution or better) down to as low as $399, and to drive all-in-one PCs with 4K displays built into them to $999. This trend should benefit graphics card vendors NVIDIA (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD) as the ubiquity of higher-resolution displays drives increased demand for graphics performance.

Discrete cards are just faster
Every so often, you'll get people who says that PC gaming is "dead" because game consoles are adequate for getting the most out of games, even though game consoles offer neither the performance nor the flexibility of a reasonable gaming PC. You'll also get folks who will claim that integrated graphics will eventually become "good enough" for high-end gaming, and as a result will render discrete graphics cards obsolete.

While it is technically true that the very low end of the discrete graphics market was made more or less obsolete by integrated solutions, the high-margin, high-value discrete market is quite safe from integrated solutions. Discrete graphics processors have much larger thermal and transistor budgets (NVIDIA's highest-end GK110 chip has 7.1 billion transistors -- Intel's biggest processor with integrated graphics likely has just south of 2 billion), allowing them to pack much more performance than what is feasible on an integrated solution.

Why the need for more performance?
We've of course established that discrete solutions can offer much better performance, but the more important thing to illustrate is just why that performance is necessary. To show that, let's go to AnandTech's recent review of NVIDIA's GeForce GTX 780 Ti to see exactly why 4K monitors will drive the need for much faster graphics cards.

Looking at a performance test of the popular 3-D shooter game known as Crysis 3 tells an interesting story. The test is run with the game at medium-quality settings, not even the fullest, and the resolution is set to 3840x2160 -- which is what a 4K monitor's resolution will be. In this, the $700 NVIDIA GeForce GTX 780 Ti can muster only 41 frames per second. While playable, this is not considered a fully "smooth" experience.

When AnandTech tested two of NVIDIA's 780 Ti cards running in tandem, the pair was able to pull in 54.3 frames per second on average. Two of AMD's R290X flagship cards were able to pull 56.4 frames per second on average. This means that it takes over $1,000 worth of discrete graphics horsepower to play the most demanding titles in 4K at medium-quality settings.

This is an opportunity for NVIDIA and AMD
As higher-resolution displays become more popular among desktop PC gamers (and at the $399 price point, adoption is surely to improve dramatically), there will be an increased need for graphics horsepower. This means that in the absence of new graphics cards, gamers may begin to buy multiple flagship cards at a higher rate. Of course, once AMD and NVIDIA launch new graphics cards (the current high-end lineups from both camps could use a shot in the arm), this could drive a pretty healthy refresh.

Foolish bottom line
As games continue to render more realistic scenes, and as display resolutions continue to improve, there will be an increasing need for more powerful discrete graphics cards, particularly for desktops. This is a win for both AMD and NVIDIA, and could ultimately lead to a richer mix of discrete graphics chips being sold going forward. Keep a close eye on this trend throughout 2015 and beyond, particularly if you own stock in either GPU vendor.

Leaked: Apple's next smart device (warning -- it may shock you)
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Ashraf Eassa owns shares of Intel. The Motley Fool recommends Apple, Intel, and NVIDIA and owns shares of Apple and Intel. Try any of our Foolish newsletter services free for 30 days. 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.

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.

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