Apple Switch to ATI Graphics Prompts Analysts to Cut NVIDIA Rating

Standard & Poor’s analyst Clyde Montevirgen is keeping his $9 price target NVIDIA stock, while cutting his rating to Strong Sell (from Hold), one of the factors being Apple’s shift to other vendors for graphics solutions, Barron’s reports.

“Considering our concern about weakening consumer PC demand and anticipated market share loss as Apple shifts vendors, we are more confident in our forecast for sub-industry growth over the next few quarters, and believe the shares will under perform,” Montevirgen writes in a research note.

“Although its Tegra line provides growth opportunities, we are cautious of sales following customers’ initial product ramps,” he adds.

“Meanwhile, the share price implies a forward P/E multiple that is currently above the industry-average, which we do not think is justified,” Montevirgen notes.

According to the Barron’s report, NVIDIA's stock is down 43 cents, or 4.3%, to $9.69.

In July, Apple updated its all-in-one iMac line with the latest Intel Core i3, Core i5 and Core i7 processors and powerful new graphics from Advanced Micro Devices (AMD) - the ATI Radeon HD 5750.

In tandem with the rollout of new iMacs, Apple also unveiled a new Mac Pro line with up to 12 processing cores and up to 50 percent greater performance than the previous generation.

The new workstations feature the latest quad-core and 6-core Intel Xeon processors, as well as ATI graphics.

The base configuration, which starts at $2,499 (US), is equipped with the ATI Radeon HD 5770 card with 1GB of GDDR5 memory.

AMD, now the exclusive provider of discrete graphics chips in Apple's computers, has announced plans to phase out the ATI brand name later this year.

Apple is widely expected to refresh the MacBook Air, its ultra-thin notebook which hasn’t seen a revision in well over a year.

The switch from NVIDIA’s 9400M chip is inevitable not only because Apple likely wants to put its Macintosh offerings on par with one another, but also because the company has experienced problems with NVIDIA’s solutions lately.