Adam Spatacco, The Motley Fool
5 min read
In This Article:
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Industry research suggests that Nvidia gained meaningful market share in the AI accelerator market during the first quarter.
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While AMD has introduced a series of competing chipsets to those offered by Nvidia, the company reportedly lost market share last quarter.
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While AMD has new chipsets scheduled for release later this year, so too does Nvidia -- potentially making it even harder for AMD to catch its rival in the chip realm.
Over the last two years, semiconductor powerhouse Nvidia (NASDAQ: NVDA) has emerged as the biggest force fueling the artificial intelligence (AI) revolution. The company's industry-leading graphics processing units (GPU) and CUDA software platform have helped Nvidia build a substantial lead over its competition in the chip market.
While Advanced Micro Devices has carved out an impressive pocket for itself in the AI data center landscape, recent reporting suggests that the company is still far behind Nvidia.
Let's explore the dynamics behind Nvidia's lead over AMD, and assess if the king of the chip realm just made its checkmate move against its top rival.
During the early phases of the AI megatrend, Nvidia benefited from having a first-mover advantage over other semiconductor companies when it comes to GPUs specifically. While being a first mover can help companies experience outsized growth relative to the competition or form strategic partnerships with leaders in adjacent industries, there's no guarantee that these businesses can sustain their leads.
In the case of Nvidia, however, trends suggest that company's lead over AMD may only be getting bigger.
Beth Kindig, who serves as a technology research analyst and CEO of I/O Fund, recently shared a data point from SemiAnalysis that pointed out that Nvidia's market share in AI accelerators increased by roughly two points during the first quarter -- now hovering around 88%. By contrast, AMD's share shrunk by about one point, now comprising roughly 4% of the market.
The chart illustrates AMD's revenue and operating income by reportable segment during the first quarter. One of the more notable takeaways is that AMD's data center operation is its fastest-growing business, all while remaining highly profitable.
However, a more subtle idea is that sales from the data center business shrunk by 5% quarter over quarter. To be fair, there could be a number of reasons for this.
First, the semiconductor industry is cyclical -- which makes quarterly trends tougher to predict and gauge when it comes to the overall health of the business. In addition, AMD's latest accelerator architectures are expected to ship later this year. This timeline could be playing a role in the slight deceleration of the data center business compared to the fourth quarter.
