How Much Value Can Nvidia Add With Further GPU Market Share Gains?
Steam recently conducted a survey that revealed that 85% of gamers on Steam use Nvidia’s (NASDAQ:NVDA) discrete GPUs. So why is this survey important? First, Steam is the largest digital gaming distribution platform and therefore, represents a solid sample size. Second, the percentage figure is significantly higher than what research firms such as Jon Peddie have estimated. According to the research firm, Nvidia’s market share in discrete desktop GPUs was 72.8% in Q3’17, and this figure dropped to 66.3% in Q4’17. So what is the upside for Nvidia if the Steam survey is a glimpse of things to come?
Upside Based On Potential Market Share Gains
If Steam’s survey represents a broader shift towards Nvidia among gamers, there could be some potential upside to our forecasts for the company’s Discrete GPU market share. In the event that Nvidia’s market share reaches the aforementioned 85% figure – which is fairly unlikely, but used here for demonstrative purposes – from the ~70% levels it has seen of late, there could be an upside of nearly 20% to our price estimate for the company’s stock. To estimate this, we have created an interactive dashboard that shows forecast for discrete GPU market size, and how incremental share in this market can result in earnings and valuation upside for Nvidia. You can modify any of our forecasts to come up with your scenarios and price estimates.
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