NVIDIA GeForce RTX 4090 sell-through indicators point to a booming PC gaming market

Current macroeconomic factors can work against growth in any market discretionary spending, but regardless, the demand for high-end PC gaming gear seems strong. We only have to look at NVIDIA’s recent launch of the GeForce RTX 4090, a $1600 graphics card for hardcore game enthusiasts, creators and data scientists. Granted, it’s impossible to parse out exactly who these gaming GPUs are selling out to, but demand seems to have been very strong so far with this launch.

The photo above pretty much says it all. Although this very high-end graphics card from NVIDIA retails for $1599, voracious PC enthusiasts and gamers lined up at retailers around the world for the first few days of availability, hoping to get in on the action. Here too there is an important distinction to be made. Since NVIDIA was able to provide a significant amount of cards for a Day 1 global launch effort, we can deduce that at least a decent amount shipped out of the gate. The only question that remains is how NVIDIA’s replenishment efforts might respond, as many online and physical retail locations are currently showing a sold-out status for GeForce RTX 4090 cards. However, a few third-party partner cards can still be found, albeit at significantly higher prices than NVIDIA’s GeForce RTX 4090 MSRP.

A source close to the company told me NVIDIA “There were definitely people queuing for GPUs, but much cheaper cards (pre-pandemic). And with the current economy, that is quite remarkable.” Again, we have to temper this with a pinch of salt, as availability indicators in the current months will be critical to keep an eye on. Persistent sold-out flags could mean that NVIDIA is selling all the RTX 4090 GPUs it can build, or that it can’t keep up with demand. That said, going back to the company’s Q2 2023 earnings in August, NVIDIA CEO Jensen Huang noted, “our sell-throughs are not at the highest levels early in the year, but are still very solid. In fact, resale is up 70% since pre-COVID, pre-pandemic. And so it’s very clear that gaming, the fundamentals of gaming, are strong, and this medium is doing really well. Not to mention that gaming platforms are used or gaming PCs are used for influencers, people share content, create content, VBloggers, VTubers, etc. There are all kinds of new ways to engage and spend time with video games .

Ask about PC gaming and how NVIDIA’s Ada will increase to match it

Jensen’s observations sum things up nicely for current market dynamics. Not only is there still strong demand for gaming PCs with powerful graphics cards, but the entire desktop PC platform has gone through a transformation of sorts in recent years and was pushed even further into the mainstream during the pandemic surge in demand to working from home. Modern gaming PCs are now not only great entertainment platforms for gaming, but they are also powerful media creation and sharing tools that more and more people from all walks of life are getting into and experiencing. And to me, that broader market appeal should mean more consistent demand.

It’ll be interesting to see how NVIDIA’s numbers shake out in the company’s next earnings call, which is expected to be on 11/16/2022, but its charismatic CEO, Huang, had this to say during a recent Q&A session on investor day at its GPU Technology Conference (GTC) a few weeks ago. “Normally, and Ada will be no different, we go from top to bottom. That’s where the enthusiasts like to see brand new products and the customers who renew more often every few years like to see their new products. It’s also the segment where we need to scale for Omniverse and Omniverse workstations and servers… It was a sensible place for us to take off first. And so we’ll start Ada nicely this quarter, but largely next quarter and very, very robustly exiting the year and going into next year. So that’s our current execution plan. But we are in a very good position at the moment.”

I’m not much of a gambler, but I think the combination of strong incentives to move residual channel inventory from legacy products coupled with strong demand for the latest Ada Lovelace powered RTX 40 series GPUs could mean better prospects in the short term, with a robust Christmas shopping season leading up to the end of the year.

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