He Wall Street Journal amazed on AMD’s “breakthrough deal” this week with OpenAI, calling it “the culmination of an extraordinary decade-long turnaround effort, solidifying AMD’s status as Nvidia’s most legitimate competitor.”
Shortly after taking over the company in 2014, [CEO] His implemented a systematic plan to eat Intel’s lunch, which he accomplished by attacking Intel’s core product lines while it was bogged down by manufacturing issues. Now, Su has set his sights on Nvidia, the $4.5 trillion chip giant led by his cousin, Jensen Huang. Some analysts believe that if Su can land more major customers for its AI chips, AMD could join the trillion-dollar valuation club before long.
“With this, it’s natural to ask: Did AMD just checkmate Nvidia?” asks the Motley fool investment site. But your answer seems to be “no”…
AMD has increased its momentum in the AI market in recent years, launching the AMD Instinct line of accelerators and, in the last quarter, predicting that its MI350 series would drive revenue growth in the second half of the year. Some analysts have said that AMD’s innovations position it to compete with Nvidia’s Blackwell architecture and chip, released late last year, but Nvidia’s commitment to releasing updates annually could keep it a step ahead when it comes to overall GPU performance and therefore revenue. Big tech companies are looking for the most powerful computer available, and so far, they know they can find it at Nvidia…
[AMD’s deal this week] In fact, it is an interesting operation that guarantees the company an important position in this phase of infrastructure expansion. [Nvidia CEO] Huang has said that spending on AI infrastructure can reach 4 trillion dollars by the end of the decade, and this represents a huge opportunity for chip designers like AMD and Nvidia. So the OpenAI deal is positive for AMD, but I wouldn’t say it’s negative for Nvidia. This chip giant signed its own deal with OpenAI last month and involves deploying 10 gigawatts of Nvidia systems in data centers…
A quick comparison of the two deals: The Nvidia-OpenAI deal involves more gigawatts, and Nvidia isn’t giving up a stake in its business; In addition to this, although Nvidia is offering funding for OpenAI, this will result in revenue growth as OpenAI returns to Nvidia to commission GPUs. This virtually guarantees that Nvidia will be the chip designer that benefits the most as OpenAI expands, and AMD is unwilling to get ahead of the market leader. All this means that yes, AMD should get a win thanks to its deal with OpenAI and this can boost its growth in the market. But the chip designer can’t checkmate its larger rival, as Nvidia is perfectly positioned to maintain its long-term lead.
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