Still-Bullish Morgan Stanley Tamps Down Expectations For Nvidia's Turing GPUs

Investors have high expectations for the next-generation NVIDIA Corporation NVDA Turing gaming GPUs, but one analyst said Thursday the processors may not have as much of a near-term impact as bulls are anticipating. 

The Analyst

Morgan Stanley analyst Joseph Moore reiterated an Overweight rating and $273 price target for Nvidia.

The Thesis

Turing adoption will be more of a slow burn than a raging inferno, Moore said in the Thursday note. (See his track record here.) 

Reviews and benchmark performance comparisons for the GeForce 2080 products on 4k displays suggest a 38-percent performance boost over GeForce 1080, but only a 3-percent performance boost over GeForce 1080ti, the analyst said. The performance improvement on 1080p was mininal, he said. In addition, on 1080p, the performance improvement was minimal.

The 3-percent performance increase over the slightly less expensive 1080ti is somewhat disappointing and certainly not indicative of the kind of boost that would drive widespread upgrades, Moore said. The 2080ti provides a much larger performance boost, but its $1,199 price tag will also discourage most mainstream gamers, he said. 

Looking ahead to the 2018 holiday season, Moore said the Pascal products will likely continue to be the go-to mainstream solution for most gamers.

While the initial launch of the Turing GPUs may be disappointing for some investors who were hoping for huge initial sales numbers, Moore said the appeal of the Turing devices will become higher once mainstream software that can make better use of their capabilities — such as ray tracing — catches up to the hardware tech.

Few mainstream games will be out this holiday season that support ray tracing technology, Moore said. 

“The bottom line here is that with a slower adoption ramp in mainstream, and a high bar short term, we wouldn't expect much upside from the gaming business in the next couple of quarters." 

Price Action

Nvidia stock traded lower by 1.3 percent on Thursday morning but remains up 38.4 percent year-to-date.

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Photo courtesy of Nvidia.