AMD (AMD) and NVIDIA (NVDA) are Both GPU Winners, MKM Says
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"Both companies are benefiting from recent GPU launches, with signs of abundant customer supply and attractive price-for-performance given continued premium pricing," Ing said. "With AMD's completed $1.3bn in offerings that retired straight debt, it is on a faster path to net income profitability (a key hurdle for some long-only investors)."
Ing also noted GPU pricing and availability is favorable. "For NVDA and AMD, our proprietary scrapes of retail GPU card sites saw robust increases in supply (starting in August) while preserving some price premium across their respective GPU refreshes (Pascal and Polaris)," he said. "It appears that both suppliers are succeeding in their respective markets, with NVDA focused on the premium enthusiast market and AMD more focused on the sub-$200 volume-market."
For AMD, checks shows shipping product in volume and customers like the pricefor-performance enough to continue to pay a premium. There should be strong tailwinds in discrete GPUs (20-25% of sales) in 2H16 following a relatively faster Polaris launch vs. last year's R9 series.
- RX 480 average selling prices are $270 (n=14, 2 out of stock) vs. suggested pricing of $199. This card launched on June 29.
- RX 470 average selling prices are $216 (n=7, 1 out of stock) vs. suggested pricing of $149. This card launched on August 4.
- RX 460 average selling prices are $127 (n=11, 0 out of stock) vs. suggested pricing of $99. This card launched on August 8.
For NVDA, the analyst notes cards are now widely available, and selling above suggested pricing when including founders edition models. This bodes well for positive gaming market contributions (55% of JulyQ sales) to both sales and gross margins.
- GTX 1080 average selling prices are $682 (n=13 founders and non-founders, 9 out of stock) vs. suggested pricing of $599. This card launched on May 27.
- GTX 1070 average selling prices are $443 (n=23, 2 out of stock) vs. suggested pricing of $379. This card launched on June 10.
- GTX 1060 average selling prices are $254 (n=20, 6 out of stock) vs. suggested pricing of $249. This card launched on August 8.
The firm maintained a Buy rating on both stocks with a price target of $8 on AMD and $74 on NVDA.
Shares of AMD closed at $6.04 yesterday.
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