Gamescom 2019 started today, and some of the most exciting announcements involved NVIDIA’s (NVDA) GeForce RTX gaming GPUs. In the fourth quarter of 2018, NVIDIA stock took a hit as the GPU demand from crypto miners vanished. The stock fell further in the first half of 2019 as the company’s next-generation Turing-based GeForce GPUs had a slow uptake because of lack of ray tracing supported games. Ray tracing technology makes light in video games more realistic by improving shadows, reflections, and light sources.
The concept of ray tracing first came to the fore with PCs equipped with NVIDIA’s expensive RTX GPUs. To boost ray tracing adoption, NVIDIA went out of the box and launched various version of its RTX GPUs. In less than a year, it launched the traditional RTX 20 series and SUPER RTX 20 series—at the same price. The company is now looking to expand its ray tracing customer base beyond enthusiasts to mainstream gamers.
NVIDIA ray tracing inside Microsoft’s Minecraft
On August 19, NVIDIA stock rose 7% after the company announced a ray tracing partnership with Microsoft (MSFT) at Gamescom 2019. Microsoft will bring NVIDIA’s real-time ray tracing feature to one of its most popular games, Minecraft.
Minecraft first came out in May 2009, but it still has more than 91 million active users every month. The introduction of ray tracing will Minecraft‘s biggest update since its release. Microsoft is also expected to support Minecraft in its next-generation game console, codenamed “Project Scarlett” and due to release next year. The console will use Advanced Micro Devices’ Navi GPUs. Rumors have suggested that AMD’s Navi GPUs for Microsoft will support ray tracing. So, connecting the dots, we can conclude that AMD’s GPUs will support ray tracing for Minecraft on the console.
Gamers don’t need expensive hardware to play Minecraft. They can even play the game on mobile devices without affecting performance. So the Minecraft deal reflects NVIDIA’s strategy to put ray tracing technology into the hands of more and more gamers. Expanding on this strategy, NVIDIA is also bringing cloud games to Android phones.
GeForce NOW now on Android
NVIDIA’s cloud gaming service, GeForce NOW, allows gamers to play games across PC, Mac, and SHIELD TV. The company’s now bringing this service to Android. Mobile users will be able to access GeForce NOW later in the year. As GeForce NOW is a cloud service, gamers can buy games at popular digital stores and play them across different platforms—including PCs, mobile, Switch TV, and Mac. They don’t need to pay extra to play the same game on different platforms. Moreover, game developers also don’t need to make an effort to port games onto new platforms.
NVIDIA has suggested that mobile users turn to Bluetooth gamepads for a complete gaming experience, as some games require a gamepad. Some of its suggested gamepads are the SHIELD controller, Razer Raiju Mobile, and the Steelseries Stratus Duo or “Glap Gamepad” in Korea. GeForce NOW is still in beta. We have yet to see when this service goes commercial and how NVIDIA prices it.
Plus, NVIDIA formed GeForce NOW Alliance with Softbank and LG U+ to bring cloud gaming to Japan and Korea. Among the early adopters of GeForce NOW are LG and Samsung’s (SSNLF) flagship devices.
Samsung’s interest in gaming
Samsung is increasingly interested in mobile gaming. It’s trying to enhance gaming experiences on its mobile phones. So the company has partnered with AMD to bring AMD’s gaming GPUs to Samsung smartphones. Samsung is also offering NVIDIA’s GeForce NOW cloud gaming service.
Apart from mobile, Samsung manufactures various consumer electronics. At Gamescom 2019, Samsung launched its new NVIDIA G-Sync CRG5 gaming monitor in Europe. The curved display offers an industry-first 240-hertz refresh rate and features NVIDIA GeForce GTX 10-Series, GTX 16-Series, and RTX 20-Series GPUs.
Also at Gamescom 2019, Alienware unveiled its Aurora R9 gaming PC, powered by NVIDIA’s GeForce RTX 2080 GPU and Intel’s Core i9-9900K processor. These announcements show that NVIDIA’s broadening its gaming business and bringing its technology to more platforms. Both efforts show that the company’s trying to maintain or regain its dominant GPU market share.
The right time to buy gaming stocks like NVIDIA
Now is the right time to buy gaming stocks like NVIDIA that have strong growth potential but a distressed present scenario. Since October 2018, NVIDIA stock has fallen 40%. It’s now seeing the light of the day as ray tracing picks up. I think investors should look at buying NVIDIA now while the stock is cheaper, given its fundamentals and the growth potential in both AI and autonomous cars.
Puja Tayal holds no position in NVIDIA stock.