The battle for AI supremacy between Advanced Micro Devices (AMD) and NVIDIA is intensifying as both giants introduce new chips at Computex 2024.
AMD is striving to catch up to NVIDIA’s dominance in the AI sector, capitalizing on the robust spending associated with the ongoing digital transformation of enterprises. According to IDC forecasts, global spending on digital transformation is projected to hit approximately $4 trillion by 2027, showing a Compound Annual Growth Rate (CAGR) of 16.2% from 2022 to 2027.
Gartner anticipates that AI software spending will experience a CAGR of 19.1% between 2022 and 2027, reaching $297 billion in 2027. Spending on Generative AI (GenAI) software is set to surge from 8% in 2023 to 35% by 2027. Deloitte predicts that enterprise spending on GenAI will grow by 30% in 2024 from $16 billion in 2023.
This significant investment by enterprises presents lucrative growth prospects for both AMD and NVIDIA.
The Chip Launch Race
Both AMD and NVIDIA are prioritizing the rapid launch of AI-capable chips to maintain a competitive edge.
New AMD Offerings
At Computex 2024, AMD revealed its Instinct accelerator roadmap, including the upcoming Instinct MI325X accelerator slated for availability in the fourth quarter of 2024. The Instinct MI325X accelerator boasts 288GB of ultra-fast HBM3E memory, extending AMD’s GenAI performance capabilities.
The next-generation CDNA 4 architecture, expected in 2025, will power the AMD Instinct MI350 Series, estimated to deliver up to 35 times better AI inference performance compared to the AMD Instinct MI300 Series featuring AMD CDNA 3. The CDNA “Next” architecture will drive the MI400 series accelerators set for release in 2026.
AMD also introduced the fifth generation of EPYC server processors (Turin) leveraging the Zen 5 core, expanded its portfolio with the Ryzen AI 300 Series, and launched the Ryzen 9000 Series processors for laptops and desktop PCs.
NVIDIA’s Latest Offerings
Meanwhile, NVIDIA expanded its product range with the announcement of the next-generation AI chip architecture, Rubin, which will leverage HBM4 technology. This announcement came on the heels of the March unveiling of Blackwell, currently in production and expected to ship to customers later this year.
NVIDIA aims to introduce new AI chip models annually instead of its previous biennial timeline. The company also presented various new tools and software models at Computex 2024.
NVIDIA’s decision to increase the frequency of chip releases reflects the intense competition in the AI chip market and the company’s determination to uphold its dominant position, which faces challenges not only from AMD and Intel but also from initiatives by Microsoft, Alphabet, and Meta Platforms.
Big Tech in the AI Arena
Microsoft’s Maia 100 AI accelerator and innovations from Alphabet’s Google and Meta Platforms indicate the tech giants are also gearing up to compete fiercely in the AI race, introducing cutting-edge solutions tailored for advanced AI workloads.
Looking Ahead
NVIDIA has delivered an impressive 121.4% return year-to-date, outshining the growth of AMD, Microsoft, and Alphabet at 13.2%, 10.4%, and 23.5%, respectively.
While NVIDIA currently maintains a Zacks Rank #1 (Strong Buy) and holds promise in the AI sector with its high-performance chips, AMD’s latest products position it well to challenge NVIDIA in both data centers and the expanding AI-enabled consumer PC market in the long run.
Investors should note that AMD, with a Zacks Rank #3 (Hold), may present a more favorable entry point in the future due to its moderate growth prospects for the near term and relatively premium valuation compared to industry benchmarks.
