NVIDIA Ray-Tracing Technology Rides On Adoption, Shares Rise

Shares of NVIDIA (NASDAQ:NVDA) , which have suffered an onslaught in the concluding months of 2018, gained 4% to close at $175.71 on Mar 19 following the company’s GPU Technology Conference (GTC) 2019.

At the event, the company emphasised on the growing uptake of its RTX ray-tracing technology, which has been adopted by “the world’s top 3D application providers” per the respective upcoming product releases.

Further, management stated about its new partnerships and released data on its growing developer base and an increasing number of gaming customers at the event.

The company highlighted the growing acceptance of its solutions by key players, namely Cisco (NASDAQ:CSCO), Dell, Hewlett Packard Enterprise and Lenovo. Moreover, a heavy reliance on its technologies by industry leaders like Accenture (NYSE:ACN), Amazon (NASDAQ:AMZN) , Charter Communications (NASDAQ:CHTR), Microsoft (NASDAQ:MSFT) and Toyota was also stressed upon.

Notably, the company’s GPU developer ecosystem is fast gaining ground with the number of developers exceeding 1.2 million from 800,000 last year. Further, there are now 125 GPU-powered systems among the world’s 500 fastest supercomputers and more than 600 applications powered by NVIDIA’s CUDA parallel computing platform.

Talking about RTX, Greg Estes, vice president, Developer Programs at NVIDIA, said: “We’re thrilled with the broad industry adoption of NVIDIA RTX, which speaks volumes on how real-time ray tracing is transforming the 3D market.”

Real-Time Ray Tracing: A Game Changer

NVIDIA’s Turing GPU and its real-time ray tracing technology are witnessing a massive adoption, evident from the announcements made at the conference. Management pointed out more than 20 partners including Adobe (NASDAQ:ADBE), Autodesk (NASDAQ:ADSK), Dassault Systèmes, Pixar, Siemens, Unity, Unreal and Weta Digital among others that support its RTX platform.

Further, to propel wider embracement, NVIDIA is enabling ray tracing backup to several GeForce GTX GPUs. This is likely to lend developers a massive installed base of gamers.

Notably, Unreal Engine and Unity — the two popular commercial game engines — are integrating the ray tracing features, which will be used by game developers for adding ray-traced effects to run in real time on NVIDIA GeForce GPUs.

The company is also benefiting from the adoption of real-time ray tracing in the professional visualization markets. Reportedly, RTX has been welcomed by more than 80% of film studios and 3D application providers. With real-time ray tracing, studios are capable of reducing the post-production time, which accounts for majority of expenses.

We believe, the real-time ray tracing technology will help NVIDIA expand its customer base, thereby boosting its revenue stream.

However, competition from Microsoft’s DXR technology and Advanced Micro Devices (NASDAQ:AMD) , which are also key players in the field of real-time ray tracing technology, poses a concern.

NVIDIA currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

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