The research firm said that while the stock may "lag somewhat" in the second half, it expects better prospects in 2006. "In the second half of 2005 we expect the widely known Xbox wind-down at Nvidia will take place, supplemented by overhang from both companies' shipment above demand in the first half at the high-end," it said. "We believe 2006 plays out better as PS3 [PlayStation 3] licensing ramps, Longhorn improves the outlook for discrete graphics and Nvidia potentially recovers share with the next stage of OEM designs for the spring refresh. As graphics' stocks tend to move on near-term product momentum, we would get more aggressive on these prospects late in 2005, as excess inventory concerns will linger through the back-to-school period."
