Recently, a group of analysts at Wells Fargo & Co, a diversified financial services company has indicated that NVIDIA will face great difficulties to cope with the new competition from both AMD in graphics cards and Intel in HPC market. As indicated by their study, the growth of the company could stagnate in the future.
AMD and Intel begin to influence negatively on the growth of NVIDIA
NVIDIA value in the stock market has been very favorable in recent years, but now the company’s stock fell to $50 (down 1.17% today on the back of the downgrade) a week ago when the GeForce GTX 1060 officially announced. However, now it seems that this trend is changing its dynamics.
For a very long time NVIDIA has a strong position in the market. However, its position at AMD seems to be changing and everything indicate a good comeback when AMD will launch its full line of Polaris graphics cards and especially when VEGA will make an appearance in the form of high-performance graphics solution.
The report of Wells Fargo mentions that this renewed competition after AMD offer new graphics cards, as well as the difficulties that can cause by Intel with HPC market would influence negatively on the growth of NVIDIA and possibly limit significantly their ability to overcome the market expectations in the short term.
For now, NVIDIA is still very dependent on the GPU business, both to generate revenue and margin. However, the company certainly needs to progress a lot in order to diversify its revenue.
It’s important to note that Wells still think NVIDIA will grow, just not beat market expectations in the fashion that they have been in recent times.