Current macroeconomic factors may fly in the face of growth in any market that could be considered discretionary spending but regardless, demand for high-end PC gaming gear appears strong. We only need to look at NVIDIA’s recent launch of the GeForce RTX 4090, a $1600 graphics card for hard-core gaming enthusiasts, creators and data scientists. Admittedly, it’s impossible to parse out who exactly these gaming GPUs are selling-out to, but demand appears to have been very strong so far with this launch.
The above picture says it all, really. Though this very high-end NVIDIA graphics card retails for $1599, voracious PC enthusiasts and gamers lined up at retailers around the globe for the first days of availability, in hopes of getting in on the action. There’s an important distinction to make here as well. Since NVIDIA was able to deliver a significant quantity of cards for a day 1 global launch effort, we can deduce that there were at least a fair quantity shipped out of the gate. The only question that remains is how NVIDIA’s replenishment efforts can react, since many retail locations online and brick-and-mortar are currently showing a sold-out status for GeForce RTX 4090 cards. There are still a few 3rd party board partner cards to be found, however, though at notably higher price points than NVIDIA’s GeForce RTX 4090 MSRP.
A source close to the company told me NVIDIA “certainly has had people standing in line before for GPUs, but for far lower-priced cards (pre-pandemic). And with the current economy that’s pretty remarkable.” We should temper this, again, with a little pinch of salt of course, because availability indicators in the current months will be critical to watch. Persistent sold-out flags could mean NVIDIA is selling all the RTX 4090 GPUs it can build, or that it can’t keep up with demand. That said, if we go back to the company’s Q2 2023 earnings call back in August, NVIDIA CEO Jensen Huang commented that, “our sell-through is off the highs in the beginning of the year, but is still very solid. In fact, sell-through has increased 70% since pre-COVID, pre-pandemic. And so it’s very clear that gaming, the fundamentals of gaming are strong, and this medium is really doing well. Not to mention that gaming platforms are being used or gaming PCs are being used for influencers, people are sharing content, creating content, VBloggers , VTubers, etc. There are all kinds of new ways of engaging and spending time with videogames.”
PC Gaming Demand And How NVIDIA’s Ada Will Ramp To Meet It
Jensen’s observations do sum things up well for the current market dynamics. Not only are gaming PCs with powerful graphics cards still experiencing solid demand, but the entire desktop PC platform has experienced a transformation of sorts in recent years, and was driven even further into the mainstream during the pandemic work-from-home surge in demand. Modern gaming PCs now are not only great entertainment platforms for gaming, but they’re also powerful media creation and sharing tools that more and more people from all walks of life are getting into and experiencing. And to me that broader market appeal should spell more consistent demand.
It will be interesting to see how NVIDIA’s numbers shake out in the company’s next earnings call, which it’s expected to hold on 11/16/2022 but the charismatic CEO, Huang had this to say in a recent investor day Q&A session at its GPU Technology Conference (GTC) a couple of weeks ago. “We typically, and Ada will be no different, ramp from the top down. That’s where the enthusiasts would like to see brand-new products and the customers that refresh more frequently every couple of years or so would like to see their new products. It’s also the segment where we need to ramp for Omniverse and Omniverse workstations and servers… It was a sensible place for us to ramp first. And so, we’ll ramp Ada nicely starting a little bit this quarter, but largely next quarter and very, very robustly leaving the year and going into next year. So, that’s our current execution plan. But we’re in a really good place at the moment.”
I’m not much of a betting man, but I think the combination of strong incentives to move remaining channel inventory of legacy products, coupled with strong demand for its latest Ada Lovelace-powered RTX 40 series GPUs, could spell a brighter outlook in the near term, with a solid holiday shopping season run-up to the end of the year on tap as well.