Nvidia's New Mainstream Graphics Cards Look Good, but Price Is a Wildcard
Nvidia faces plenty of competition in the mainstream and budget portions of the graphics card market, not only from AMD, but also from Intel. AMD launched higher-end graphics cards as part of its RX 9000 series last month, and mainstream cards are likely to come soon. That followed Intel's late-2024 launch of Battlemage, its second attempt at discrete graphics cards that garnered positive reviews and were attractively priced.
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Nvidia is getting somewhat aggressive on pricing with the RTX 5060 and RTX 5060 Ti, which makes sense, given the competitive environment. The top-tier RTX 5060 Ti has an MSRP that's $70 below its predecessor, while the RTX 5060 will match the price of the RTX 4060. According to a review from Tom's Hardware, the RTX 5060 Ti provides a solid performance boost over the last-generation version.
Nvidia, AMD, and Intel haven't been able to produce enough graphics cards to meet demand, and artificial intelligence (AI) chips are part of the problem. All three companies outsource GPU production to TSMC, and much of the available manufacturing capacity is going toward data center GPUs aimed at training and running advanced AI models. This has led to poor availability and sky-high prices well beyond manufacturer's suggested retail price (MSRP).
If these new graphics cards from Nvidia actually sell at MSRP, the company will certainly have a winner on its hands. However, there's not much reason to believe supply will be any better than it has been with recent launches.
Tariffs could create another headache. While graphics cards appear to be currently exempt from the Trump administration's tariffs, that may not remain true for long. Nvidia's partners, which assemble and sell its gaming graphics cards, are generally based in China or other parts of Asia. Tariffs could spike prices further and reduce demand.
Nvidia dominates the market for graphics cards, partly because its products offer great performance and industry-leading features, but also partly due to some serious customer loyalty. Shortages and high prices are putting that loyalty to the test, though, and the longer this situation drags on, the higher the risk that gamers will opt for available alternatives. Nvidia's unit market share stood at 90% in the third quarter of last year.
Nvidia's data center segment, which covers its AI accelerators, generated more than 10 times as much revenue as the gaming segment during the last reported quarter. While Nvidia is leaving money on the table by failing to meet demand for its gaming GPUs, it makes sense to do so since data center GPUs are far more lucrative.
However, it's hard to predict what future demand looks like for AI accelerators. There are plenty of estimates calling for explosive growth to continue, but there are also reports of companies like Microsoft pulling back on data center leases. If Nvidia's results are being partly driven by overbuilding and overinvesting across the tech industry in AI infrastructure, demand could become a problem down the road. In that scenario, Nvidia's gaming business will become more important.
At least on paper, Nvidia's new mainstream graphics cards are more affordable than their predecessors. MSRPs mean little right now, though, and if the company can't get enough supply to the market, retail prices could end up dramatically higher. Nvidia remains the overwhelming market-share leader, but it's not making its customers happy with a lack of availability and inflated retail prices.
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Timothy Green has positions in Intel. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short May 2025 $30 calls on Intel. The Motley Fool has a disclosure policy.
Nvidia's New Mainstream Graphics Cards Look Good, but Price Is a Wildcard was originally published by The Motley Fool
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