Nvidia Inc. (NVDA) shares are recouping the stock market losses of last week after the graphics chipmaker went back to its roots, rolling out new graphics cards geared toward its core gaming market.
During Gamescom, the world’s largest gaming expo being held in Cologne, Germany, the Santa Clara, Calif.-based semiconductor company unveiled the two chips that will be used for high-end video games. Calling it “10 years in the making,” Nvidia’s Chief Executive Jensen Huang said once consumers see a game using its RTX platform they won’t be able to go back.
“Turing opens up a new golden age of gaming, with realism only possible with ray tracing, which most people thought was still a decade away,” said Huang during Gamescom. “The breakthrough is a hybrid rendering model that boosts today’s computer graphics with the addition of lightning-fast ray-tracing acceleration and AI. RTX is going to define a new look for computer graphics.” According to the company, the new chips deliver 4K HDR gaming at 60 frames per second on even the most technologically advanced video games. (See more: Nvidia Forecast Lags Wall Street as Crypto Demand Evaporates)
Gaming Still Accounts for Most of Revenue
While Nvidia has been diversifying its revenue stream beyond the gaming market, it still accounts for the majority of its sales. Last year the stock was getting a boost as cryptocurrency miners were purchasing its graphics cards in droves to mine for digital tokens, but that business has all but dried up. But with Nvidia launching new gaming chips, investors shrugged off a steep decline in the stock last week, sending shares higher. In pre-market action shares of Nvidia were trading up 0.66% or $1.64 to $249.48. It ended Monday’s trading session up 1.2% to $247.84 a share. (See more: NVIDIA Stock Has More Than 20% Upside: Wells Fargo.)
Third Quarter Guidance Disappointed
In reporting second-quarter earnings results last week that matched Wall Street on the EPS side and surpassed views on the revenue front, the chip maker warned it expects revenue to come in at $3.25 billion, up or down 2% for its third quarter, lower than the $3.34 billion Wall Street was looking for. The company’s target doesn’t include sales from the cryptocurrency market. The new chips, which will cost $499 for the GeForce RTX 270 and $999 for the GeForce RTX 2080 Ti, are available for preorders now and will be widely available as of Sept. 20. The company noted in a press release that the new RTX platform has already received the support of the gaming industry with developers including EA, EPIC Games, and Square Enix, among others, developing for the platform. The new gaming chips come on the heels of the launch of Turing last week, Nvidia’s latest chip design for GPUs.