Video card manufacturers AMD (AMD 17.60, -0.30, -1.68%) and NVIDIA
(NVDA 131.59, -1.51, -1.13%) displayed relative weakness at the start of
The two names retreated in pre-market action after RBC Capital Markets made cautious comments about pricing trends in the industry. Specifically, the brokerage observed that video card prices in the secondary market are still on the decline, which points to relatively light demand. The view prompted RBC Capital Markets to lower its price target for NVIDIA to $200 from $230. However, the firm maintained its “Outperform” rating on the stock. RBC did not change its view of AMD shares, but the company did reduce its expectations for AMD's revenue for fiscal 2019.
NVIDIA's price target change from RBC should not come as a massive surprise, considering that the market has received other indications that the company's latest product launch was underwhelming for the target market. Emboldened by very strong sales of the GTX line of video cards, which was launched in 2016, NVIDIA unveiled new ray-tracing technology in the RTX line, launched in late September. However, the most recent launch did not gather quite as much strength as the company had hoped for, due in part to a lack of software titles that took advantage of the new technology. This issue has been compounded by high selling prices for the new RTX cards.
It is worth noting that press reports have pointed toward an imminent launch of another RTX card from NVIDIA that would presumably offer some sort of compromise, allowing users to experience ray-tracing technology at a lower price and thus making the actualization of consumer demand more palatable.
Shares of AMD and NVIDIA hit fresh lows for the year at the start of yesterday's session before rallying sharply alongside the broader market. Today's early decline has sent the two stocks toward the middle of their trading ranges from yesterday.