Is Nvidia’s Market Share in Pro Graphics Cards Sustainable?
Nvidia (NASDAQ:NVDA) faces challenges in the graphics market from players like Intel (NASDAQ:INTC) and AMD (NYSE:AMD), which are increasingly providing integrated graphics chips to PC makers that reduce the need for separate (discrete) graphics cards. One area in which Nvidia has a dominant position is the Professional Graphics Cards market. There is a risk, however, that Nvidia’s leading share will be eroded as integrated graphics cards become more powerful and if spend on high end graphics cards, like those made by Nvidia, is curtailed due to broader economic concerns.
We currently have a Trefis price estimate of $11.77 for Nvidia’s stock, about 16% above the current market price of $10.12. Below we highlight how Nvidia’s Pro Graphics Cards Market Share has trended in recent years and expectations for the future.
Nvidia Pro Graphics Cards Market Share
Professional Graphics Cards are graphics cards purchased separately by professionals to get superior, faster 3D graphics performance from their PCs than they are able to get with the graphics cards that come installed with a computer. Such cards appeal to professionals and firms involved in architecture, engineering, and creative professions, such as advertising and design, that involve heavy graphics usage.
In the past, Nvidia Pro Graphics Cards Market Share has increased from 70% in 2005 to 86% in 2009.
The average of forecasts for Nvidia Pro Graphics Cards Market Share created by Trefis members in the last week indicated a projected decrease from 85.6% in 2010 to 81.5% by the end of the Trefis forecast period, compared to the baseline Trefis estimate of a decrease from 86% in 2010 to 83% by the end of the Trefis forecast period.
The member estimates imply a downside of only 1% to the Trefis price estimate for Nvidia’s stock. We expect Nvidia’s pro graphics share to decline slightly over our forecast period and not to revert to historical lows. Economic slowdown and resulting drop in spending would favor lower-priced cards and could hurt Nvidia’s position in the pro graphics card market.
What do you think? Will Nvidia’s market share in pro graphics cards return to 2005 levels? You can modify our forecast above to see how such a scenario would impact’s Nvidia’s stock.