Munster Sees 'Holy Grail' In Nvidia's New GPUs, While Stifel Takes Neutral Stance On Chipmaker

NVIDIA Corporation NVDA unveiled its GeForce RTX product line Monday. The graphic cards are based on new and advanced Turing architecture, which creates realistic lighting and shadows.

The products are the “holy grail of computer graphics,” Loup Ventures founder Gene Munster said in a Tuesday post. Stifel analyst Kevin E. Cassidy maintained a Hold rating and $250 price target.

The Thesis

The release is a significant upgrade from Nvidia's current PC gaming and graphics processing unit, Cassidy said in the initiation note. (See the analyst's track record here.) 

“As a derivative to this new era of graphics, investors should notice that the DRAM requirement is GDDR6 DRAM rather than GDDR5 DRAM in the previous GPU generation,” the analyst said. “In our view, this demonstrates that DRAM are no longer simple commodity devices but essential components for driving new features and overall system performance.”

Nvidia worked closely with numerous game developers on creating content that will demonstrate the increased GPU features, Cassidy said. 

“The company announced 11 initial games that would enable real-time ray tracing with more releases expected to follow. Additionally, Nvidia announced 16 games that would support Deep Learning Super-Sampling  or the ability to use deep learning to enhance the edges of rendered objects and improve lower quality graphics."

Nvidia's valuation is keeping Stifel on the sidelines, Cassidy said. 

Munster Finds 3 Catalysts In GPU Lineup 

Nvidia advancements represent a giant step toward the future of gaming, said Loup Ventures' Munster.

“Hardware and software innovations will increasingly save developers time and money and will improve the gaming experience,” the sell-side analyst-turned-venture capitalist said. 

Munster highlighted three key catalysts in the new product line: 

• The RTX line adds real-time ray tracing, which provides a more realistic gameplay.
• A rise in AI image processing will revamp computer graphics and add super resolution.
• Real-time ray tracing will make virtual reality experiences more lifelike and immersive.

Price Action

Nvidia shares were up 1.5 percent at $251.56 at the time of publication Tuesday. 

Related Links: 

What Wall Street Thinks Of Nvidia's Q2 Earnings

Morgan Stanley Sees Buying Opportunity In Nvidia: 'Clarity Likely After Next Week's Product Launches'