Gamers Are Angry At Stock Market Darling Nvidia—Here’s Why

Forbes Business Breaking Gamers Are Angry At Stock Market Darling Nvidia—Here’s Why Siladitya Ray Forbes Staff Covering breaking news and tech policy stories at Forbes. Following May 29, 2023, 11:13am EDT | Press play to listen to this article! Got it! Updated May 29, 2023, 11:13am EDT Share to Facebook Share to Twitter Share to Linkedin Topline With a market cap nearing $1 trillion and a stock price that has surged more than 170% since the start of this year, Nvidia’s investors appear to be visibly excited about the chip maker’s future, a sentiment the company’s oldest and most vocal consumers don’t appear to share as PC gamers and tech reviewers criticize the company’s gaming products. A sign is posted in front of Nvidia headquarters in Santa Clara, California.

Getty Images Key Facts As Wall Street cheered Nvidia’s “cosmological” profit projections for upcoming quarters last week, gaming discussion boards and subreddits were filled with gloomy predictions of even pricier gaming graphic cards (GPUs) produced by Nvidia, which are used to help video games render their visuals and a key part of any gaming PC build. Gamer anger toward Nvidia stems mostly from what they believe is the company’s steep prices , confusing marketing , lack of features , and a lack of gaming performance uplift from its latest generation of gaming GPU—the RTX 4000 series. The upper-tier RTX 4080 and flagship RTX 4090 launched last year, priced at $1199 and $1599, respectively, compared with $799 and $1499 for similar-tier products in the previous generation.

The rollout was also marred by Nvidia “ unlaunching ” one of its upper-mid-tier GPUs, after backlash over its naming scheme from reviewers and gamers who accused the company of trying to mislead consumers into paying top-tier prices for a mid-level product. The “unlaunched” GPU—which was confusingly also named RTX 4080—was eventually released to the market more appropriately named as the RTX 4070Ti but it was still met with negative reviews for offering a relatively small performance uplift from a previous generation GPU, despite costing more. The company’s most recent gaming product, the RTX 4060Ti—usually its value tier GPU—hasn’t fared much better in reviews and is not selling well.

Crucial Quote Nvidia CEO Jensen Huang has responded to criticism about Nvidia’s gaming products by proclaiming that Moore’s law—the phenomenon where the number of transistors in a chip of a certain size doubles every year—“is dead. ” The Nvidia chief then added, “the ability for Moore’s Law to deliver twice the performance at the same cost, or at the same performance, half the cost, every year and a half, is over…so the idea that a chip is going to go down in cost over time, unfortunately, is a story of the past. ” Big Number 38%.

That is how much Nvidia’s gaming revenue was down in the first quarter of 2023, compared to the same time last year. The company blamed this on “macroeconomic slowdown” and “lower shipment” of gaming products to “normalize…inventory levels. ” News Peg Despite facing backlash from reviewers and the online gaming community, Nvidia remains the most dominant player in the space.

According to the most recent monthly hardware survey conducted by Steam, the biggest digital storefront for PC gaming, more than 76% of users own an Nvidia GPU. Competitor AMD is a distant second with nearly 15%, followed by Intel at 8. 6%.

Despite backlash and criticism from gamers, Nvidia’s dominance has hardly seen a dent compared to the same survey from last year. Key Background Nvidia’s market cap is approaching $1 trillion as the value of the company’s shares has surged 170% since the start of this year and more than 25% since its first-quarter earnings report last week. The enthusiasm surrounding Nvidia stems from the excitement around generative AI, which was mentioned 43 times in its earnings call last week.

Nvidia’s GPUs were used by OpenAI to develop the language learning model GPT, which powers ChatGPT. Earlier this year, Midjourney—whose generative AI tool creates images based on text prompts—also announced it’s service will be powered by servers running Nvidia’s GPUs. Aside from gaming and graphics, the company’s advanced chips also happen to be AI powerhouses.

This has prompted both Nvidia and analysts to project that it could emerge as one of the big winners in the ongoing race to build more sophisticated generative AI tools, similar to ChatGPT and Midjourney. Further Reading Bigger Than Amazon? Nvidia Stock Surges After ‘Cosmological’ Profit Projections (Forbes) Nvidia Has Another Problem. Gamers Aren’t Buying Its New Graphics Card.

(Barrons) Why Nvidia May Become The 6th Company Worth $1 Trillion (Forbes) Follow me on Twitter . Send me a secure tip . Siladitya Ray Editorial Standards Print Reprints & Permissions.