NVIDIA's (NASDAQ:NVDA) latest generational leap in computer graphics appears to be a game-changer, as its latest RTX 30 series GPUs (graphics processing units) based on the 8-nanometer (nm) Ampere architecture are going to deliver a huge bump in performance over the previous-generation Turing cards.
The new cards seem to be generating a lot of buzz, especially because of their aggressive pricing. NVIDIA says that the new Ampere GeForce RTX cards "deliver up to 2x the performance and 1.9x the power efficiency over previous-generation GPUs," but they are priced identically to their previous-generation counterparts. This could be bad news for the highly anticipated Sony (NYSE:SONY) PlayStation 5 console, which could end up being severely underpowered when compared to entry-level NVIDIA cards.
NVIDIA's generational change brings about massive performance gains
NVIDIA has really pushed the price-to-performance bar with the new RTX 30 series cards. The company claims that the $499-priced RTX 3070 is a faster card than the previous generation's RTX 2080 Ti Turing GPU, which cost $1,200. The RTX 3070 boasts 20.4 teraflops of single-precision performance, compared to the RTX 2080 Ti's 13.4 teraflops.
A teraflop is a mathematical measurement of a processor's computing performance. One teraflop means that a processor can perform 1 trillion floating-point operations per second. So a graphics card with a higher teraflop reading is usually considered to be better for gaming, as it can deliver better graphics performance under ideal conditions.
For comparison, NVIDIA's previous $499 card, the RTX 2070, had 7.5 teraflops, which means that the company has nearly tripled the computing ability of its successor without any price increments. The flagship RTX 3080 starting at $699 has also witnessed a similar jump, delivering 29.8 teraflops of single-precision performance, compared to the RTX 2080's 10.1 teraflops.
The bottom line is that the new RTX 3070 and the RTX 3080 cards are going to deliver triple the performance of their predecessors at the same price. NVIDIA has been able to achieve this thanks to its shift to an 8-nanometer (nm) manufacturing node from the previous generation's 12nm node. And this is where things could start going south for the upcoming PlayStation 5, as lower-rung NVIDIA cards could deliver a better gaming performance -- at least in theory.
Why the PlayStation 5 should be worried
The PS5 will be powered by an AMD GPU packing 10.28 teraflops, lower than the Microsoft Xbox Series X's 12 teraflops. Now, there is no word on pricing yet, but according to rumors the new console could be priced somewhere between $499 and $549 because of high component costs and new technology. Of course, a $499 RTX 3070 may not be a direct threat to the PS5, as it may cost as much as the console alone -- but NVIDIA's lower-priced RTX 30 series cards may pose a challenge.
An RTX 3060 is reportedly in the works to target the mid-range GPU market. It could succeed the RTX 2060 that was launched at $349 in January 2019. The RTX 2060 clocks 6.5 teraflops, so its successor may deliver close to 20 teraflops, going by the gains the RTX 3080 and RTX 3070 have seen, and leave the PS5 in dust.
Now, some may argue that a PC built using a $349 GPU will eventually turn out to be costlier than a PS5 when other components such as the CPU (central processing unit), RAM (random access memory), and storage are taken into consideration. However, it wouldn't be surprising to see NVIDIA provide even cheaper options to gaming enthusiasts with entry-level Ampere cards that could have more computational power than the PS5.
For instance, the NVIDIA GTX 1660 that went on sale in March 2019 for a price of $219 was rated at 5 teraflops. That card was based on the 12nm Turing process, indicating that a successor to that card based on the Ampere architecture could be more powerful than the chip powering the PS5 if NVIDIA can replicate the gains that the RTX series cards are expected to deliver.
In the past, PC builders have made PCs for $500 (excluding the monitor and peripherals, such as keyboard and mouse) using $200 graphics cards to generate console-level performance. There have been reports stating that the PS5 could cost as much as $450 to manufacture. If that's indeed the case, and the next-gen console from Sony turns out to be a lot more expensive than the previous one, gaming enthusiasts may switch their allegiance to PCs powered by Ampere graphics cards, helping NVIDIA remain a top video game stock.