The global leader in visual computing technologies, NVIDIA Corp. (NVDA - Free Report) recently extended its gaming alliance with Ubisoft to provide support to the latter’s most popular games such as Assassin’s Creed Unity, Far Cry 4, The Crew, and Tom Clancy’s The Division.
The collaboration is aimed at bringing an enhanced gaming experience to PCs. This extended deal is a positive for NVIDIA, as it will help the company to 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.
Founded in 1986, Ubisoft Entertainment S.A. is a French video game developer, publisher and distributor. It is the third largest game developer in the U.S. The current partnership will help Ubisoft to market other games using NVIDIA’s GameWorks technology, which provides a visually rewarding graphics experience for users.
Consumers prefer an improved soundscape for gaming along with rich graphics. Thus, NVIDIA’s revenues stand to benefit significantly if the latest GameWorks technologies succeed in meeting user requirements. This will increase NVIDIA’s customer base and help in garnering additional revenues.
Apart from this, NVIDIA’s strategic alliance with International Business Machines (IBM - Free Report) to produce GPU-accelerated editions of IBM's enterprise software running on its Power technology will strengthen NVIDIA’s position versus Intel Corp. (INTC - Free Report) .
NVIDIA Corporation offers digital media processors and related software for a wide range of visual computing platforms. In the first quarter, the strength in gaming and high-end notebook GPUs helped NVIDIA to report better-than-expected results. Moreover, both the top and bottom lines increased on a year over year basis, primarily due to higher growth in GeForce, GTX, desktop and notebook GPU sales.
Although the decline in PC demand may affect results in the upcoming quarter, increased game console wins, launch of new products, new offerings and good execution from the company can help win new customers.
Nonetheless, competition from the likes of Advanced Micro Devices Inc. (AMD - Free Report) and QUALCOMM Inc. remains a near term headwind.
NVIDIA has a Zacks Rank #2 (Buy).