IT'S OVER! I Can't Stay Quiet on AMD vs Nvidia Stock (NVDA) Any Longer

Summary

AMD's recent earnings call revealed record revenues of $6.8 billion, driven largely by a 122% increase in data center revenues. However, AMD lags behind Nvidia, whose data center revenues are seven times larger and growing faster, with 88% tied to AI. Despite promising products like the Mi300X and Mi325X GPUs, AMD faces challenges including slower innovation cycles compared to Nvidia and risks from diversifying too broadly across markets. As a result, AMD's stock is being reevaluated as less of a pure AI play compared to Nvidia, prompting investors to reconsider their positions.

Takeaways

• 😀 AMD reported record revenues of $6.8 billion, a 17% increase quarter-over-quarter.
• 😀 Data center revenue for AMD surged 122% year-over-year, reaching $3.5 billion.
• 😀 Nvidia's data center revenue was significantly higher at $26.3 billion, growing 154%, showcasing its market dominance.
• 😀 Nvidia's chips are the industry standard for AI, with major companies purchasing them en masse, indicating strong demand.
• 😀 AMD's AI accelerator, the Mi 300X, launched over a year after Nvidia's h100, affecting market timing and adoption.
• 😀 AMD's revenue exposure to AI is limited, with only 25-35% of total revenues tied to AI, compared to 88% for Nvidia.
• 😀 The global AI market is expected to grow nearly 11 times over the next nine years, emphasizing the potential for data center investments.
• 😀 AMD's performance metrics show that its new Mi 325X chips could outperform Nvidia’s h200, if priced competitively.
• 😀 Rapid innovation cycles at Nvidia, with new chip releases happening almost twice as fast as AMD, pose a significant risk to AMD's competitiveness.
• 😀 AMD's diversification across multiple markets (PCs, gaming, embedded) could dilute its focus on high-growth AI sectors.

Q & A

What were AMD's total revenues for the latest quarter?

AMD reported record revenues of $6.8 billion for the quarter, which is a 17% increase quarter-over-quarter and an 18% increase year-over-year.

How did AMD's data center revenues compare to Nvidia's?

AMD's data center revenues were $3.5 billion, representing a 122% increase year-over-year, while Nvidia's data center revenues were $26.3 billion, which is 7.5 times larger than AMD's and grew 154% year-over-year.

What percentage of Nvidia's total revenue comes from its data center business?

88% of Nvidia's total revenue comes from its data center business.

What challenges does AMD face in the AI market?

AMD faces challenges such as Nvidia's rapid innovation cycles, a significant gap in AI revenue exposure, and the risk of spreading its resources too thin across various markets.

What is the Mi300X, and how does it compete with Nvidia's offerings?

The Mi300X is AMD's AI accelerator designed for memory-intensive AI workloads, claiming to perform around 30% better than Nvidia's H100 GPUs.

What are the projected growth rates for the AI and data center markets?

The global AI market is expected to grow nearly 11 times over the next 9 years, while the market for data center accelerators is projected to grow more than 5 times by 2032.

What recent advancements did AMD announce in their GPU lineup?

AMD announced the Mi325X, which reportedly delivers 20 to 40% better inference performance compared to Nvidia's H200 GPUs.

Why is AMD's gross margin lower than Nvidia's?

AMD's gross margins are around 50%, significantly lower than Nvidia's 76%, which reflects differences in pricing power and product positioning in the market.

What potential issues could arise from AMD's focus on x86 architecture?

AMD's focus on x86 could hinder its adaptability as more chip designers adopt ARM architecture, which is becoming more prevalent in the industry.

How has the investment outlook for AMD changed following the earnings call?

The investment outlook for AMD has been adjusted downward due to its lower exposure to AI compared to Nvidia, which offers a more direct investment opportunity in the AI market.