NVIDIA, Square Enix Allies To Launch Final Fantasy XV For PC

NVIDIA Corporation (NASDAQ:NVDA) recently joined forces with Square (NYSE:SQ) Enix to unveil Final Fantasy XV Windows Edition for PC in Gamescom 2017, which is being held in Cologne, Germany. The event will captivate gaming enthusiasts with real-time graphics and physics simulations technologies.

Final Fantasy XV is an open world action role-playing video game developed by Square Enix for PlayStation 4, Xbox One and Microsoft (NASDAQ:MSFT) Windows. The alliance will enable Square Enix's Final Fantasy to include NVIDIA’s GameWorks suite of tools having 4K and 8K high resolution textures along with HDR10. The Final Fantasy series has sold more than 135 million units globally.

The collaboration is aimed at bringing an enhanced gaming experience to PCs. This deal is a positive for NVIDIA, as it will help the company gain market share among gaming content developers. We believe that NVIDIA’s GameWorks suite of tools, which improve the visual effects of games, will help to generate additional demand for its graphics technology.

Consumers prefer an improved soundscape for gaming along with rich graphics. Thus, NVIDIA’s revenues are likely to benefit significantly if the latest GameWorks technologies succeed in meeting user requirements.

In such a scenario, we believe the Final Fantasy XV which is set to release in “early 2018” is likely to increase NVIDIA’s customer base and also aid in garnering additional revenues.

Notably, NVIDIA reported splendid second-quarter fiscal 2018 results. Revenues not only surged 56.2% year over year to $2.230 billion, but also comfortably surpassed the Zacks Consensus Estimate of $1.948 billion, as well as management’s projection of $1.95 billion (+/-2%).

NVIDIA generated 53% of its revenue from Gaming in the last quarter. Per the company, the strong growth “reflects the vibrant gaming ecosystem, underpinned by continued excitement over our recent launch GPUs and other technologies, great games, and growing interest in e-sports.”

Bottom Line

NVIDIA continues to be the world’s biggest graphic processing hardware provider for PCs since the past several decades. The company’s efforts toward autonomous vehicle and the AI segment reflect its intention to be the largest player in the self-driving and machine learning arena too.

The company remains one of the best performers in the semiconductor space. Shares of NVIDIA have gained 49.1% year to date, significantly outperforming the industry’s 13.1% rally.

On the flip side, the secular decline in the PC market has affected many chip makers. NVIDIA’s dependence on the PC market continues, and consequently is being marred by adverse conditions. The preliminary data released by Gartner depicted that PC shipments in the second quarter declined 4.3% year over year to 61.1 million units. This decline marked the 11th straight quarter of year-over-year fall, the longest in the history of the PC industry.

Further, Gartner’s forward-looking statements make us a shade cautious about the prospects of the PC industry. The research firm agreed that the recent surge in DRAM prices and short supply of SSD will lead to an escalation in PC prices.

Additionally, competition from the likes of Intel (NASDAQ:INTC) and QUALCOMM Inc. (NASDAQ:QCOM) remains a near-term headwind.

NVIDIA currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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