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NVIDIA Corporation (NASDAQ:NVDA) Shield – a Stepping Stone to GRID Cloud Gaming?

Posted by Todor Pichurov, May 17, 2013 05:02

This week NVIDIA Corporation (NASDAQ:NVDA) opened preorders for its Shield gaming device, but the stock market did not exactly shake with excitement. Many were left wondering how well a mobile gaming device priced at $349 will sell, considering competitive gadget PS Vita needed a serious price cut to start selling reasonably well, and it was cheaper than the Shield to begin with.

Several websites concluded that it may be that NVDA is not trying to rake in a lot of cash with Shield, and that the pricey toy may have a different purpose altogether. Considering the Shield's capability to stream PC games onto the portable screen using a GTX 650 or newer GPU, it does seem logical that NVDA is using Shield as a stepping stone in promoting its GRID cloud gaming technology.

Even though previous forays into the world of cloud gaming have proven mostly unsuccessful (OnLive perhaps being the prime example), if there's anyone equipped to deliver in this field, it would be NVIDIA. The benefits of a low-latency cloud experience that is available for a wide range of popular titles are undeniable and Shield is a small but important step in that direction.

Meanwhile, analysts with Raymond James set a price target of $19 for NVDA stock, bumping it up by $2, together with giving the stock a 'strong buy' rating. The analysts at Zacks restated a 'neutral' rating for the chipmaker's stock, with a price target set at $15.

NVDA seems to have solidified its place as the GPU maker of choice for PC gaming enthusiasts. The company reported a 3.2% increase of sales despite the general slump in the market and analysts with Wedbush Securities commented that people are obviously still willing to shell out some extra dollars to get the highest performance out of their games. This all happened in a quarter that saw a record drop of 14% in demand on a global level.

NVDA closed yesterday's session nearly 0.5% down, at $14.63 per share.

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