NVIDIA GeForce RTX 40 Gaming GPUs Revenue Ramping 40% Faster Than Ampere, Majority Still Without RTX

NVIDIA has revealed that its GeForce installed base saw continued growth and the latest RTX 40 GPUs revenue ramped 40% faster than Ampere.

During the Bank of America Global Technology Conference, NVIDIA"s SVP of Gaming, Jeff Fisher, sat down to discuss the state of the GeForce gaming segment & what we can expect in the years ahead of us. Jeff states that NVIDIA saw a 20% CAGR annual growth rate for the GeForce segment through FY23. The cards such as the GeForce RTX 4070 and RTX 4070 Ti which start at $699 US have seen 40 percent faster revenue ramp compared to their Ampere predecessors. Not only that but new game streamers, content creators and gamers themselves are buying a higher class of GPU which reflects the recent ASP lift.

And last, I wanted to share with you a bit about our Ada ramp. As you guys know, we have -- we launch our products, our new generations from the top down, starting at the top. And for reasons you're also aware of, Ada has taken us a little longer to move down the stack than typical generation. So for this reason, we've got a fair amount of history on the 699 up class of Ada, this is our 40-70 tie and up. And Ada from -- in terms of the revenue generated is ramping much faster, 3x that uttering and about 40% faster than Ampere. We're super pleased with the Ada ramp to date.

NVIDIA SVP, Jeff Fisher (Bank of America Global Technology Conference)

NVIDIA also presented a visual representation of the whole PC Gaming & GeForce RTX ecosystem. The NVIDIA GeForce GPU saw a 1.4x sell-through rate during FY23 & the GeForce Gaming revenue saw a climb of $8.4 Billion in FY23 compared to $4.8 Billion in FY20. The 3-year CAGR had a 10% ASP uplift and 9% units shipped on average.

I shared with you how the 4070 tie is doing relative to prior Gens. And, in fact, the early results from lower down Ada are also very -- are very strong. I mean, we're -- I'm really pleased with the Ada ramp.

Okay. Well, it's a good question. I -- the -- first of all, when we look at -- when I look at mix up or upsell, remember, even in the days of, I'll call it, product shortages throughout the pandemic and work from home and crypto as you mentioned, we didn't really change our GPU pricing. I mean, the way I measured upsell was from my core price now what it ultimately got inflated to in the end market.

And what we've seen today for Ada in this class 699 and up is a $300 to $400 upgrade in mix in the high end. So gamers who are buying our high-end of our Ada are buying from a much lower class of product, which is super exciting for us. Ampere, it wasn't -- it was -- I'll speculate, it was in the $200 to $300 upgrade range. And Turing was probably a bit below that, so we've seen an increasing mix of upgrades over time.

Vivek Arya

So just to get it right. So what you're saying is that people who upgraded to Ampere on an average bought a card that was $200 more expensive. And now those who are upgrading to Ada are buying something that is $300 or $400 more expensive?

Jeff Fisher

Right. Relative to what they had.

NVIDIA SVP, Jeff Fisher (Bank of America Global Technology Conference)

Meanwhile, the most important data point provided by NVIDIA is that while the $699 US+ segment has seen a 3x ramp over Turing GPUs with the newest GeForce RTX 40 "Ada" offerings, the majority of GeForce gamers are still running non-RTX GPUs. Of the entire GeForce userbase, only 44% of users are running an RTX GPU and 18% of users have a GPU that is more performant than an RTX 3060 GPU which leads to a massive growth area.

Yes, it's -- I'll tell you my expectation and that is, at the highest end, those gamers will upgrade every generation. I mean, they like the best, they likely have the wherewithal to afford the high end, each Gen.

And that's about every 2, 2.5 years, right? As you get to the bottom of the stack, I think we're stretching out to probably 3.5 years to 4.5 years for a replacement cycle. It's probably, we see more upgrades than we do new PC sold. So it'd be shorter than the overall PC cycle, but that's about the frequency, yes.

Vivek Arya

So averaging somewhere around 3.

Jeff Fisher

3.5, 3, 3.5 years, something.

NVIDIA SVP, Jeff Fisher (Bank of America Global Technology Conference)

To address this large market, NVIDIA has recently announced the GeForce RTX 4060 which starts at $299 US and will be available next month. This new GPU is priced lower than the RTX 3060 which is priced at an MSRP of $329 US. This provides a great incentive for users to upgrade, especially in the features department where one would get DLSS 3, faster raytracing capabilities, superb AI-GPU prowess, and much more coming to the Ada GPUs in the latest AAA titles. NVIDIA showcased ACE, a platform that uses generative AI to create NPCs in games during Computex 2023 powered by Ada GPUs.

But NVIDIA has a more important point and that's the upgrade cycle. For a high-end user who eyes the RTX 4090, the upgrade cycle will be much smaller than a mainstream user. An RTX 4090 user is going to upgrade to whatever best is out there and that's a 1.5 - 2.0 years gap.

For a mainstream user, the upgrade cycle is much larger and it averages around 3.0 - 3.5 years. So the vast majority of gamers upgrading to an RTX 4060 are going to be coming from either a GTX 1060 or RTX 2060 GPU and they are going to see a big upgrade in performance and feature set.

As for when things will be returning to normal, Jeff except that the second half of this year will be a return to form for PC gaming with the mainstream GeForce RTX 40 GPUs in full wing & a wave of new AAA gaming titles to help boost the platform further.

Recent figures by Jon Peddie Research paint a dire look for the PC gaming industry but the analyst is hopeful that the market is on course correction and also expects better results in the second half of this year. Also, despite its massive growth thanks to AI, NVIDIA's CEO has made a commitment to gamers that they won't be forgotten and that all the benefits that AI brings to the table will be extended to GeForce users.

News Source: Seeking Alpha