Time for AMD to outshine Nvidia? Read & decide.
I think it is undisputable that $NVIDIA Corp(NVDA)$ is currently the world’s leading chip maker in all fronts when it comes to artificial intelligence (AI).
However, with the latest ban by the Biden administration on exporting technologically advanced AI chips to China and a list of other countries (of less business significance), its beginning to take its toll on Nvidia.
Coupled with the lack of a possible “replacement chip” for the Chinese market, it is likely that Nvidia’s Q4 2023 earnings will be impacted when the chip maker next announces its results for end 2023.
At the same time, other chip makers are making inroads in the AI-chip space that was initially dominated by Nvidia.
By this, I am referring to $Advanced Micro Devices(AMD)$ and Intel Inc (INTC).
The latter deserves its spotlight on its own.
If you have been following this chip maker, there were several key developments for AMD, suggesting the company is poised to seriously challenge Nvidia's dominance in the graphics processing unit (GPU) market.
(1) AMD Radeon chip.
AMD Radeon RX 7000 series GPUs release: The new GPUs, built on the RDNA 3 architecture, boast impressive performance and energy efficiency gains. (see above)
Early benchmarks suggest AMD is closing the gap with Nvidia's high-end RTX 40 series GPUs, particularly in ray tracing performance.
(2) AMD Data centre chip.
On 06 Dec 2023, AMD released its AMD Instinct MI300 AI accelerator.
It is data center-grade processor that speed AI tasks, such as training large language models (LLM).
According to AMD’s CEO Lisa Su, “the Instinct MI300 chips run AI operations much faster”, at the launch event.
More importantly, its AMD’s customers & partners like:
HPE,
Oracle,
Databricks
and many others…
They are already using the chips to (a) run in their products & services, (b) test its efficiency, (c) plan for both horizontal & vertical integration into their environment.
Not only are the chips faster than their predecessors, but they can be combined to further improve performance.
Why it is AMD’s time!
Following developments highlight several reasons why AMD might finally be ready to face Nvidia head on.
Performance Parity:
AMD's latest CPUs and GPUs are closing the performance gap with Nvidia's offerings.
This is particularly evident in ray tracing, where AMD has traditionally lagged behind.
As the gap narrows, AMD becomes a more attractive choice for consumers and businesses.
Strong Value Proposition:
AMD's products often offer better value for money compared to Nvidia's.
This is especially true in the mid-range and budget segments, where AMD holds a significant market share.
Market Diversification:
AMD's focus on diversifying its business beyond just GPUs to include CPUs, data center solutions, and even embedded technologies provides a more resilient business model and reduces reliance on any single market segment.
Technological Innovation:
AMD's continued investment in research and development has yielded significant advancements in chip architectures and technologies like chiplets and 3D stacking, giving them an edge in terms of innovation and future potential.
Nvidia & AMD : past month performances.
On YTD performances, Nvidia lead with +225.72% gain versus AMD’s +109.95% gain.
On past month performances, it is a different picture.
Nvidia registers a -4.10% decline versus AMD’s +15.09% gain.
With both AI-driven tech stocks in the same US market, it is clear (hopefully) which is the obvious choice for potential gains.
While AMD has made significant strides, Nvidia remains the market leader in terms of market share and brand recognition.
AMD's recent achievements demonstrate it is more than just a worthy opponent; it is a serious threat to Nvidia's dominance.
The combination of strong performance, competitive pricing, a diverse product portfolio, and a focus on innovation suggests AMD is well-positioned to further challenge Nvidia's leadership in the GPU market.
With continued execution and strategic decision-making, AMD might finally be ready to shine brighter than Nvidia in the near future.
However, it's important to note that the market is dynamic, and competition remains fierce.
Nvidia is unlikely to cede its position easily and will certainly respond to AMD's advances.
However, there is no denying that Nvidia’s Q4 earnings will definitely be impacted by the lost of China’s market share. (see above) that could easily be to the tune of approx. $1.5 Billion in revenue.
It will cause Nvidia share price to consolidate further. It is only prudent to take a stab at Nvidia after its last quarter earnings is announced. That is my take.
Final statement.
Ultimately, the battle for GPU supremacy will depend on AMD’s :
Ability to deliver innovative products.
Attract customers with compelling value propositions.
Do you think AMD is a better investment option than Nvidia?
Do you think Nvidia will consolidate further into December 2023?
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Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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Today's number has zero relevance to AMD's growth story. The positive is pre-open opportunity to buy a discounted stock price given to entirety of the shift to an AI economy.
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AMD is doing a great job recently 🚀