Tech Stocks in Focus: AMD vs. NVIDIA

NVIDIA (NASDAQ:NVDA) and AMD (NASDAQ:AMD), giants in the market of graphics accelerators and cards, met in another fierce battle. AMD Radeon RX 7800 XT and RX 7700 XT graphics cards will enter the market this month, ready to go head-to-head with NVIDIA’s RTX 4070 and RTX 4060 Ti 16 GB accelerators, respectively. Eager to compete with the upcoming AMD offerings, NVIDIA has preemptively slashed the prices of its accelerators.

The competition between NVIDIA and AMD is one of the hottest topics in the technology world. Both companies produce graphics processing units and other computer hardware, each boasting unique features and advantages.

NVIDIA is known for its high-performance gaming and graphics cards. Its GPUs are used in most modern gaming consoles and computers. NVIDIA also produces chips for machine learning and artificial intelligence, serving numerous applications.

On the other hand, AMD specializes in desktop and laptop processors, as well as gaming graphics cards. Its Ryzen processors are known for their stellar performance-to-price ratio, making them attractive to users seeking balance between cost and quality.

This enduring competition between NVIDIA and AMD has spanned for many years, with both companies constantly improving their products and technologies. However, NVIDIA remains the leader in the gaming graphics card market — thanks to its powerful GPUs and cooperation with the major game publishers. Meanwhile, AMD continues expanding its lineup of processors and graphics cards, challenging NVIDIA’s supremacy in the desktop and laptop markets.

Let’s examine the dynamics of the central server processors market. Supplies have increased by 18% to 7.2 million units, although this figure has yet to reclaim the heights of the previous year, when 9 million processors were shipped. According to the statistics, AMD achieved its peak market share of 19% in the fourth quarter of the previous year.

However, as of the end of July, NVIDIA concluded the second quarter of fiscal year 2024 with an impressive accomplishment. The company reported a staggering 101% increase in revenue, reaching $13.51 billion. Following the trading session’s closure, NVIDIA shares surged by 6.58%.

NVIDIA’s Q2 23 net income soared nearly tenfold in comparison with Q2 22, reaching $6.19 billion, while operating income soared to an impressive $6.8 billion. At the same time, operating expenses increased by only 10% to $2.67 billion. The profit margin, in annual comparison, surged from 43.5% to 70.1%. According to NVIDIA representatives, a substantial boost in the profit margin is partially attributable to the previous year’s necessity to write off $1.34 billion due to excess inventory.

Before the publication of the quarterly report, NVIDIA shares experienced a substantial uptick. The first trading session following the release of Q2 23 ended up with an increase in the company’s stock price by 0.1%, and after the trading session’s closure, quotes decreased by 0.63%.

Nonetheless, NVIDIA shares have appreciated by almost 230% since the beginning of the year, with the company’s market capitalization exceeding $1 trillion.

Meanwhile, in the discrete graphics desktop sector, NVIDIA has seen a consistent reduction in market share from 84% to 80%, while AMD has strengthened its foothold from 12% to 17%.

Sequentially, the shipment volume of discrete desktop GPUs have risen by 2.9%, totaling 6.44 million units. However, when compared year-on-year, these figures represent a 36% decline from the approximate 10 million units shipped.

Interestingly, Intel (NASDAQ:INTC), which is considered a relative newcomer in this market segment, has maintained a steady 2% share of the desktop discrete graphics market over the past year, but it managed to double its share in the first quarter of the current year.

AMD is confident in the release of new graphics cards like never before. These cards will be priced below $500, targeting a segment presently dominated by NVIDIA’s GeForce RTX 4060 series. At the same time, the RX 7800 XT model is supposed to compete with the GeForce RTX 4070 in the $600 and above price range, though prices have begun to dip. However, not all major AMD partners will be prepared to launch these new products on September 6.

Recent reports indicate that in the second fiscal quarter, NVIDIA received a notice from the U.S. authorities, urging the issuance of special export licenses for the supply of computing accelerators to specific Middle Eastern countries. Such restrictions have been in place for China since the autumn of the previous year. Representatives from the U.S. Department of Commerce declined to comment on the imposition of new restrictions on individual companies’ activities. NVIDIA and AMD’s official representatives are yet to comment on this.

In general, despite being opponents, companies move pretty much the same way. It’s all about the sector they occupy. Any fundamental fluctuations will affect them both. The news background can be easily tracked in the economic calendar, facilitating comparison of events with fluctuations in stock prices.

Thus, the competition between NVIDIA and AMD remains an essential part of the global technology industry, and both companies continue to work on improving their products and technologies to meet the needs of their customers and maintain market leadership.