A major part of NVIDIA's (NASDAQ:NVDA) graphics processor business comes from PC gamers buying new graphics chips in order to play the latest graphics-intensive PC games. Even though the overall PC market has been weak, NVIDIA reported that its sales of graphics processors into gaming-oriented PCs grew by 14% year over year last quarter.
I believe that there may be an imminent catalyst for NVIDIA's gaming-oriented graphics processor business that could fuel further growth during the second half of the year.
Intel's Skylake will be here soon
PC processor vendor Intel (NASDAQ:INTC) is expected to launch its next-generation PC processor code-named Skylake shortly, with the first wave of chips said to be aimed at the enthusiast desktop segment.
Even if a new processor family might not compel typical PC users to rush out and buy new systems, I believe that a fair number of PC enthusiasts and gamers have been waiting on Skylake before building new systems and/or upgrading existing systems.
If my hypothesis is correct, then not only should Intel see a solid boost in sales aimed at PC gamers and enthusiasts when Skylake launches, but NVIDIA could be poised to benefit as those gamers buy new graphics cards to go with their new Skylake-based systems.
Another potential advantage for NVIDIA: AMD's apparent Fury shortage
With Skylake set to begin its roll out in a week or so, NVIDIA may have another factor working in its favor. NVIDIA's main competitor in desktop graphics, Advanced Micro Devices (NASDAQ:AMD), recently released its Fury and Fury X graphics processors aimed at the high end of the desktop PC gaming market.
Although I believe NVIDIA's products are superior to AMD's based on third-party reviews, there are certainly gamers out there currently using AMD graphics that may be inclined to stick with AMD if possible due to their positive experience with its product.
However, it seems that supply of AMD's Fury and Fury X cards is quite tight. A check of popular online retailer Newegg.com shows that of the few Radeon R9 Fury and Fury X models that the site carries, all are currently out of stock. In contrast, Newegg has many different NVIDIA GTX 980 and GTX 980 Ti models in stock.
Although it seems likely that die-hard AMD users will wait for the cards to come back in stock, my guess is that buyers with no brand preference or even slight bias toward AMD might just throw in the towel and go with the NVIDIA solutions for their new system builds if the availability of AMD's Fury/Fury X cards continues to be tight.
NVIDIA will be reporting soon; keep an eye out
NVIDIA recently announced on July 23 that it would be announcing its earnings results on August 6. The company didn't negatively pre-announce, so it should report results roughly in line with its guidance last quarter.
I'll be paying close attention to the guidance that the company issues for the current quarter and will be listening for any commentary from management with respect to a potential acceleration in GPU sales as a result of the Skylake launch. I'll also be listening in for any hints as to how management expects its gaming-oriented market segment share to trend now that competitor AMD has laid all of its cards out (no pun intended) on the table.