Nvidia’s Share in Pro Graphics Cards Expected to Decline

October 1st, 2010 by Trefis Team
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Nvidia’s (NASDAQ:NVDA) dominant position in the professional graphics cards market is under pressure from AMD (NYSE:AMD). Nvidia has seen significant growth in its Pro Graphics Cards market share, from around 70% in 2005 to around 86% in 2009 [1]. However, AMD is fast catching up to Nvidia’s domination with vastly improved graphics cards.

Nvidia’s stock is greatly impacted by the Pro Graphics Cards market share. According to our estimates the Professional Graphics Cards business constitute around 31% of Nvidia’s stock price. We currently have a Trefis price estimate of $11.77 for Nvidia’s stock, in-line with the current market price of $11.82.

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Nvidia’s Professional Graphics Card Market Share

Professional graphics cards are purchased separately by professionals to get 3D graphics performance that is superior to the graphics cards that come installed in their PCs. We expect Nvidia’s pro graphics card market share to decline slightly over our forecast period primarily due to increasing competition from AMD’s FirePro line of professional graphics cards. Although Nvidia is coming up with newer versions of its Quadro brand graphics cards , a decline in consumer spending resulting from the economic slowdown spending could hurt Nvidia’s position in the pro graphics card market.

The average of Trefis member forecasts for Nvidia’s Pro Graphics Card market share indicates a decrease from 88.6% in 2010 to 85% by 2016. This is in comparison to the baseline Trefis estimate of a decrease from 86% in 2010 to 83% by the end of the Trefis forecast period. Member estimates imply an upside of 1% to the Trefis price estimate for Nvidia’s stock.

Our complete analysis for Nvidia’s stock is here.

Notes:

1. Taken from publicly released information from market research firm, Jon Peddie Research.