Nvidia stands to make $320 million a year from Nintendo Switch

After rumors claimed Nvida was working with Nintendo to provide a processor on what was then known as the NX, it has recently been confirmed that Nvidia is indeed the partner responsible for creating the processor for the Switch and stands to make $320 million annually from the partnership.

Jefferies & Co.’s Mark Lipacis shared his analysis of Nvidia stock today. On the subject of what the partnership between Nvidia and Nintendo could result in, Lipacis had this to say:

While Nintendo has been largely uncompetitive against the Sony PlayStation and Microsoft Xbox, we think the Switch has the potential to see more shipments. There are very few details on the price point, but we think the Wii and Wii U case studies are instructive. In the first 12 months of launch, Wii shipped 13m units and the Wii U shipped 4m units. Assuming 5-8 million units at a $40 ASP for Tegra translates to $200-320m in revenues and $0.11-0.16 in EPS.

Lipacis also shared his expectations for how comparable the Nintendo Switch will be to the performance of the Xbox One or PS4:

While Nintendo has been largely uncompetitive against the Sony PlayStation and Microsoft Xbox, we think the Switch has the potential to see more shipments. There are very few details on the price point, but we think the Wii and Wii U case studies are instructive. In the first 12 months of launch, Wii shipped 13m units and the Wii U shipped 4m units. Assuming 5-8 million units at a $40 ASP for Tegra translates to $200-320m in revenues and $0.11-0.16 in EPS.

It seems that the gaming industry is rather optimistic for the future of the Nintendo Switch, and the partnership between Nintendo and Nvidia. You can read the full article here.