MKM Partners has increased Nvidia’s 12-month target stock price from $36 to $39 and expects the company to have "favorable" GPU trends going into 2016 due to its gaming segment generating 58 percent of revenues in 2015.
The firm notes that GPU card price trends and availability are good indicators of Nvidia’s performance going forward. For the third quarter of FY16 (July 27, 2015 – October 25, 2015), the company reported a net income of $245 million, a 42 percent increase year-over-year. For the four quarter of FY16 (October 26, 2015 – January 25, 2016), the company anticipates gross margins to stand at 56.7 percent.
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In March, the company announced Pascal, its next-generation GPU architecture for 2016. The GPUs will make use of High Bandwidth Memory (HBM) which is similar to what AMD launched with its 28nm R9 Fury series GPU lineup back in June. The only difference is that unlike AMD’s first-generation high-bandwidth memory, Pascal GPUs will offer up to 16GB of VRAM thanks to their use of second-generation high-bandwidth memory (HBM2).
During Nvidia’s GTC conference, company co-founder and CEO Jen-Hsun Huang stated that HBM2 "will give bandwidth in excess of a terabyte per second, more than double what AMD's Fury X cards currently offer.”