Shield TV Won’t Move Nvidia Stock Today, but Its Potential Is for Real

It's not reason in and of itself to buy Nvidia stock, but it's worth considering

Many Nvidia (NASDAQ:NVDA) shareholders likely don’t even realize the company is in the set-top streaming video receiver business. Certainly, Nvidia stock isn’t broadly considered a set-top play.

Shield TV Won't Move Nvidia Stock Today, but Its Potential Is for Real
Source: Shutterstock

Many people are correctly certain that Nvidia isn’t making a meaningful dent in the market share enjoyed first and foremost by Roku (NASDAQ:ROKU), and then Amazon.com (NASDAQ:AMZN), and then Apple (NASDAQ:AAPL).

Yet, Nvidia is indeed a player in the set-top streaming video receiver business, taking aim at the higher-end of the market while most other names in the business are value-minded. The Nvidia Shield TV media player retails at between $179 and $199, depending on the version being considered.

It’s hardly a game-changer for the company. Indeed, not only is Nvidia rarely even listed on the regular market share reports that say Roku is leading the streaming hardware race, Shield TV isn’t even mentioned with Nvidia’s quarterly updates. Nor should it be, yet.

If the goal of bothering with the minuscule venture is to plant seeds and see what happens though, the company’s television-centric ambitions are laying some very interesting groundwork.

Shield TV and Nvidia Stock

It’s a curious platform. Shield is Android-powered and functions like any other Android device. Just a few days ago its operating system began upgrades to Android 9 Pie giving users the most up-to-date functionality any user can experience with Android apps. That includes Chromecast apps, which work just fine in the typical Android environment.

It’s not just a streaming piece of hardware though. It’s a robust computing tool in and of itself. The latest versions run on Nvidia’s Tegra X1 processor (the same processor used by the Nintendo Switch), utilizing eight-core ARM tech and three gigabytes of RAM to deliver 4K UHD (2160p) pictures.

It seems like overkill for a market that’s mostly made up of consumers who just want a casual experience. Why bother at all just to price itself out of the market?

And, such an assessment from NVDA shareholders would hold water, if the goal were simply to serve as the intermediary between content and viewer.

It’s possible, however, Nvidia may have something more in mind with its Shield TV than merely acting as a video-streaming platform.

Shield TV Has Potential

What that plan may remain in question, perhaps even to Nvidia itself. But, should the purpose become crystal clear at a later date, the company is ready.

We may have already seen a glimpse of that future purpose, in fact.

It’s not ground-breaking news to point out that the world of video gaming is changing.

It began with digital downloads displacing cartridge and disc-based games but has continued on to begin the displacement of consoles as game-playing devices themselves. Indie hit Fortnite, initially needing a PC to play, has since become playable on a smartphone.

Even Nvidia is making graphics-processing hardware intended to offload to the cloud the heavy-duty computing needed to play top games. It means game-streaming services like Stadia, now in development by Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG), can be played on even a low-quality machine.

It’s been rumored, in fact, that Nvidia is specifically developing support to power Google’s Stadia games played on Shield TV devices.

The prospect isn’t a stretch. Shield TV devices can already be purchased with a gamepad, for the purpose of playing Android-based games. Cloud-based game streaming outside of Android’s ecosystem is increasingly common as well. It’s the shape of things to come.

Shield TV and Nvidia Stock Downsides

It’s difficult to call Nvidia’s Shield TV a game console, of course, but it’s also difficult to say it’s not one. That’s a good reason for concern.

Consumers have seen such hybrids fail before. The Android-powered Ouya was released in 2012 to a lukewarm and mostly confused reception. The console and its back-end support finally shuttered for good earlier this year, having never found the sliver of the market that wants a decent game console and a streaming device in one, but is unwilling to spend the $400 or even $500 needed to purchase an Xbox or PlayStation.

It may have been a device that materialized before its time though. Stadia and other cloud/streaming game platforms possibly could have kept the Ouya afloat if they were around seven years ago.

It may have also been a device that lacked the big-name backing needed to inject such a device into a crowded space. Nvidia wouldn’t face such a problem.

And yet, gaming is still not necessarily all that Shield TV brings to the table.

Bottom Line for Nvidia Stock

Again, don’t look for NVDA shares to be catapulted anytime soon by its subtle entry into muddied console/streaming-box waters. Nvidia doesn’t seem to care all that much about the business and is instead focusing on more pressing opportunities like discreet GPUs and artificial intelligence. That’s as it should be.

Still, in that nobody truly knows how (or even if) consumers are going to be demanding a different kind of engagement when cloud-based gaming becomes the norm, this budding technology should be factored into the long-term outlook for Nvidia stock.

NewZoo says gamers will spend nearly $140 billion on their pastime this year. Offering a high-powered, multi-purpose platform that can handle even the most intense games wouldn’t be a bad way for Nvidia to capture a piece of that market.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley.


Article printed from InvestorPlace Media, https://investorplace.com/2019/08/shield-tv-nvidia-stock-potential/.

©2019 InvestorPlace Media, LLC