AMD's $243 Billion AI Disaster...What Happened?

Summary

This video delves into the rise and struggles of AMD, highlighting its past battles against Intel, its acquisition of ATI, and the leadership of Lisa Su that steered the company towards success. Despite a rocky start, AMD successfully diversified into consoles and CPUs, eventually challenging Intel's dominance. However, the AI boom caught AMD off guard as NVIDIA's early investments in GPU technology and CUDA created an insurmountable lead. AMD's late push into AI with acquisitions and new chips has yet to pay off, leaving the company struggling to catch up to NVIDIA in the rapidly evolving AI space.

Takeaways

• 😀 NVIDIA's dominance in the AI boom has made it the most valuable company at times, while AMD's share price has been struggling despite their involvement in GPUs.
• 😀 AMD's shares dropped by almost half from early 2024 to early 2025, erasing nearly $200 billion in market capitalization.
• 😀 AMD's historical battle with Intel over CPUs saw Intel's anti-competitive practices hurt AMD's market share, leading to lawsuits and legal challenges.
• 😀 In the mid-2000s, AMD gambled by purchasing ATI for $5.4 billion, aiming to enter the GPU market, but faced financial difficulties and a lack of integration success.
• 😀 Lisa Su, AMD's current CEO, took charge in 2012 and diversified AMD’s focus from PCs to emerging industries like gaming consoles, securing key partnerships with Microsoft and Sony.
• 😀 AMD’s turnaround was marked by the success of Ryzen CPUs, which gained market share and forced Intel to catch up, despite tight profit margins.
• 😀 AMD’s shift to TSMC for manufacturing 7nm chips enabled them to outpace Intel, who was struggling with delays on 10nm chips.
• 😀 While AMD’s CPU success was notable, NVIDIA invested heavily in AI and research, particularly focusing on GPUs for deep learning, setting the stage for future dominance.
• 😀 AMD saw a brief revenue spike during the AI boom from 2020 to 2022, but their profits began to drop in 2023, highlighting a key challenge in competing with NVIDIA for AI workloads.
• 😀 NVIDIA's CUDA ecosystem, developed for deep learning, has been a crucial differentiator, allowing researchers to leverage GPUs for AI advancements, while AMD has struggled to catch up in this space.
• 😀 AMD is heavily investing in AI, acquiring companies like Xilinx and Nod.AI to develop AI-focused hardware and software, but analysts remain cautious about AMD’s long-term ability to compete with NVIDIA in the AI GPU market.

Q & A

Why did AMD's stock value drop drastically from early 2024 to early 2025?

AMD's stock value dropped by nearly 50%, erasing almost $200 billion in market capitalization due to their struggle to compete in the AI boom, despite being involved in GPU production like NVIDIA.

What was AMD's major struggle in the early 2000s against Intel?

AMD was in a fierce competition with Intel over the CPU market, but Intel pulled ahead with cheaper, higher-volume CPU production and anti-competitive practices, which involved paying customers to avoid using AMD processors.

How did AMD try to overcome its challenges in the GPU market?

AMD acquired the Canadian GPU maker ATI for $5.4 billion, hoping to break into the growing GPU market, though this move put AMD deeply in debt and initially led to financial losses.

What significant shift did Lisa Su make to save AMD?

Lisa Su focused on diversifying AMD's business beyond the stagnant PC market, securing deals with Microsoft and Sony to make AMD chips for next-gen consoles like Xbox One and PlayStation 4.

How did AMD's sales from non-PC markets change under Lisa Su's leadership?

Under Lisa Su, AMD's sales from non-PC markets grew from 10% to 40% in just three years, primarily due to its success in the console market.

What was AMD's major success in the CPU market after 2017?

In 2017, AMD launched Ryzen CPUs, which provided high performance at a lower price, allowing them to gain significant market share and cause Intel's market share to decline.

How did AMD's strategy in chip production differ from Intel's?

While Intel relied on in-house chip production, AMD moved its manufacturing to TSMC, which was ahead in producing advanced 7nm chips, giving AMD an edge over Intel.

How did NVIDIA's early investment in AI help them dominate the market?

NVIDIA's early focus on AI, especially through the release of CUDA in 2006, allowed them to develop software that enabled their GPUs to be used in AI tasks, positioning them as the dominant GPU provider in AI research.

What role did the 2012 ImageNet competition play in shifting AI research towards GPUs?

In 2012, Alex Krizhevsky's use of NVIDIA GPUs to win the ImageNet competition demonstrated that GPUs were far more effective than CPUs for training AI models, marking a pivotal moment for the AI industry.

What challenges did AMD face in the AI boom despite its strong start in 2020?

Despite a strong revenue increase in 2020, AMD struggled to compete in the AI sector due to a lack of software support, as their GPUs did not have an equivalent to NVIDIA's CUDA, making them less appealing for AI researchers.

What moves did AMD make in 2022 to try and catch up with NVIDIA in AI?

In 2022, AMD acquired Xilinx for $50 billion to expand its presence in data centers and AI, and later acquired Nod.ai to enhance its software support for AI workloads, in a bid to catch up with NVIDIA's lead in the AI GPU market.