Vivek Arya maintained Buy ratings on Nvidia and AMD. The analyst has a $275 price target for Nvidia and a $44 price objective for AMD.
PC gaming is likely to grow at a double-digit growth in the long term, thanks to expanding adoption and new formats such as Ray Tracing, 4K and esports, Arya said in a Monday note.
The analyst said excess inventory and cryptocurrency mining issues that plagued Nvidia and AMD in 2018 are over, with third-quarter shipments growing an above seasonal 800 basis points on channel replenishment and mobile strength. This, according to the analyst, sets the stage for a 2020 recovery on new products such as Nvidia's Turing, AMD Navi and game consoles.
See Also: Nvidia Impresses Analysts With Datacenter Resurgence, Expanding Margins
After an expected 25% year-over-year decline in the GPU shipments in 2019, BofA forecasts a return to double-digit growth, thanks to underlying secular trends and proliferation of ray tracing.
With crypto mining sales going out of the equation in the third quarter of 2018, the firm said the third quarter of 2019 marked the first apples-to-apples year-over-year comparison for both AMD and Nvidia.
Specifically, Nvidia is expected to be benefit from 7nm technology and wider adoption of Turing Ray Tracing/DLSS features, Arya said. The analyst sees AMD benefiting from its strong roadmap and CPU share gain opportunity.
Nvidia shares traded around $218.08 and AMD around $39.03 at time of publication.
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