NVIDIA Corporation (NASDAQ:NVDA) recently announced that it has tied up with China-based Tencent Games to launch cloud gaming in the region.
Reportedly, the company’s GPU technology will power Tencent Games' START cloud gaming service. START will provide gamers access to Tencent's AAA quality games played on low-powered devices "anytime, anywhere".
Additionally, NVIDIA and Tencent announced a joint innovation lab for gaming. The lab will "explore new applications for AI in games, game engine optimizations and new lighting techniques including ray tracing and light baking."
Talking about the latest collaboration, Tencent management was quoted saying, “NVIDIA’s leadership in building the world’s most powerful GPUs paired with their experience in cloud solutions will empower us to scale our START platform to millions of gamers.”
Prospects of Cloud Gaming Look Bright
NVIDIA is making a big bet in the cloud gaming field with its platform GeForce Now. This platform allows gamers to use their PCs for gaming anywhere with the high-speed, low-latency technology of NVIDIA’s GPUs without needing hardware locally.
The addition of START platform boosts NVIDIA’s growing footprint in the cloud gaming space. Notably, the company entered into collaborations with Japan’s SoftBank and Korea’s LG U+ for cloud gaming solutions earlier this year.
Additionally, NVIDIA operates GeForce NOW in certain North American and European markets, delivering solid PC gaming experience in the cloud to gamers globally.
Per Valuates Report, the global cloud gaming market is projected to reach $740 million by the end of 2025, with a CAGR of 41.9% in 2019-2025. Increasing penetration of high-speed Internet, rising number of gaming device users and growing innovation in the smartphone industry are tailwinds.
The firm believes that increasing adoption of gaming technologies in China, India and South Korea is fostering the growth of cloud gaming in the Asia Pacific region. The availability of low-cost smartphones and tablets is an upside.
These estimates encourage us about NVIDIA’s growth prospects in the space. With its sustained focus on developing new and more advanced technologies, we believe that the company is well poised to capitalize on this opportunity.
Zacks Rank & Other Stocks to Consider
NVIDIA currently has a Zacks Rank #2 (Buy). A few other top-ranked stocks in the broader technology sector are Keysight Technologies Inc. (NYSE:KEYS) , Fortinet, Inc. (NASDAQ:FTNT) and CommVault Systems, Inc. (NASDAQ:CVLT) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Keysight, Fortinet and CommVault Systems is currently estimated at 9.1%, 14% and 10%, respectively.
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NVIDIA Corporation (NVDA): Free Stock Analysis Report
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