What happened
Shares of Nvidia (NVDA 5.97%) surged on Thursday, jumping as much as 4.6%. As of 2:40 p.m. ET, the stock was still up 4.1%.
While the overall market rebound today no doubt added fuel to its rise, the catalyst that sent shares of the semiconductor specialist higher was a couple of product announcements that could boost future results.
Image source: Nvidia.
So what
The biggest announcement came in the form of a press release ahead of Nvidia's Game Developers Conference (GDC) next week. The company said that Deep Learning Super Sampling (DLSS) 3 support will expand to a number of popular and new video games and developer applications. These include Forza Horizon 5, Redfall, and Diablo 4.
Perhaps more importantly, Nvidia and Epic Games announced the integration of DLSS 3 with the Unreal Engine (UE), one of the most popular video game development platforms. A DLSS plug-in for developers will make its debut with UE 5.2. This collaboration will make it "simpler for any developer to accelerate the performance of their game or application," according to the press release.
Nvidia's DLSS 3 is a specialized gaming technology powered by artificial intelligence (AI), which helps address the performance limitations of underlying central processing units, delivering increased resolution and better image quality while dramatically increasing the frame rate.
The company also introduced several new additions to GeForce NOW, its cloud gaming service, including Disney Dreamlight Valley and The Legend of Heroes: Trails to Azure. This brings the total number of games available on the platform to more than 1,500.
Now what
Nvidia's gaming segment has been hard hit by macroeconomic headwinds, with revenue of $1.83 billion down 46% year over year in the fourth quarter. That followed a 51% decline in Q3, and 33% drop-off in Q2.
Nvidia isn't dwelling on the past, however, but planning for the future. It increased its research and development spending by roughly $2.1 billion last year, up 39%. We're beginning to see the fruits of that strategy. Late last month, CEO Jensen Huang noted that "gaming is recovering from the post-pandemic downturn, with gamers enthusiastically embracing the new Ada architecture GPUs with AI neural rendering."
The combination of a rebound in gaming and new capabilities bode well for Nvidia's future growth.
