Like most big technology companies, Nvidia (NASDAQ:NVDA) was in Las Vegas last week for the Consumer Electronics Show. CES 2020 was the year’s biggest opportunity to introduce new products for consumers to snap up, and to take the stage to lay out a vision for the future.
In the case of NVDA, the company’s leadership in PC gaming, autonomous vehicles and artificial intelligence were on full display. Going into CES, Nvidia stock was at $232.32 and when the event wrapped on Friday, NVDA closed at $244.32 for a nice 5.2% gain. Not bad for one week.
GeForce-Powered Gaming
Rival Advanced Micro Devices (NASDAQ:AMD) has been gaining ground recently, but Nvidia GeForce remains the graphics card of choice for PC gamers.
The PC gaming market is on track to be worth $70 billion by 2023. That’s consumer spending on hardware alone. Nvidia and its PC partners were at CES in full force, with GeForce-powered gaming laptops and desktops. GeForce ray-tracing capability is being adopted by more game developers. It was a key feature of top-selling 2019 video games like Activision Blizzard’s (NASDAQ:ATVI) Call of Duty: Modern Warfare.
Also at CES, Nvidia announced over two dozen new gaming monitors will support its G-SYNC technology. And in a big win, LG is including G-SYNC support in all 12 of its 2020, big-screen OLED TVs. That will let these premium TVs do double duty as super-sized PC gaming displays.
On the downside, Intel (NASDAQ:INTC) used CES to unveil its first graphics card in 20 years. However, the Intel DG1 is currently available only for developers. We’ll have to wait until later this year to see whether Intel joins AMD as a real rival to Nvidia in this space.
AI, Robotics, Autonomous Vehicles and Data Center
The Consumer Electronics Show was the ideal stage for Nvidia to show off some of its most futuristic technology. That included Isaac, the company’s new unified robot development platform. Also on display was Nvidia’s DRIVE AGX Orin autonomous driving technology. This new system-on-a-chip has nearly seven times the performance of Nvidia’s previous solution. It supports full Level 5 driving capability and Nvidia says it will be available to auto makers for 2022 production.
Artificial intelligence is a key component of both robotics and autonomous vehicles, and NVDA was showing off its leadership in that area as well. The company noted that over 100 members of its Inception program — supporting startups that incorporate AI — were showcasing their products at CES.
It wasn’t on display, but Nvidia’s data center business was a hot topic of discussion. This segment has shown tremendous growth potential, and Nvidia’s blockbuster 2019 move to acquire Mellanox (NASDAQ:MLNX) was a big power play. If the acquisition passes all regulatory hurdles — it just needs Chinese approval at this point — Nvidia has an even stronger position in that market.
Bottom Line for Nvidia Stock
Nvidia stock has punished investors in the past, most notably when it crashed in the final months of 2018. Nvidia stock cratered, dropping 54% in just three months when the bottom fell out of the cryptocurrency market.
However, that was a unique set of circumstances. None of the businesses Nvidia is in now are anywhere near as risky as cryptocurrency mining. The company faces competition in all the segments where it operates, it’s not at risk of being left behind. And many of the areas where Nvidia has a big presence — including AI, data centers and autonomous vehicles — are either showing strong growth or set to do so.
Financial analysts are positive about NVDA, which remains a consensus buy. In fact, last week Merrill Lynch analyst Vivek Arya raised his 12-month price target for Nvidia to $300. CES 2020 is over, but the show gave Nvidia a global stage to show off what it has in the pipeline for 2020 and beyond. Consumers and the tech press were impressed, and so were investors.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
