AMD’s new products pose the first real threat to Nvidia’s AI dominance

Advanced Micro Devices Inc.’s major chip and software launch Wednesday poses the first real competitive threat to Nvidia Corp.’s dominance. in the field of artificial intelligence.

AMD AMD, -1.32% unveiled a number of products, including the official launch of its graphics processing units (GPUs) in the Instinct MI300 family to accelerate AI applications and its software ecosystem called ROCm, which works with Nvidia’s NVDA, – 2.28% CUDA software platform is intended to compete.

No matter how dominant Nvidia remains with its popular GPUs, AMD plans to gain market share by becoming the second-largest company to attack this particular area, a proven formula that is evident in its rivalry with Intel Corp. has proven. INTC, -1.55% in core processor space for PCs and servers.

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“You no longer have the empty playing field that you had before,” said Gartner analyst Chirag Dekate of Nvidia. “Frankly, in this multi-vendor market ecosystem, you’ll see end users benefit and partners with different distribution channels benefit.” Nvidia will no longer be able to maintain the same high prices – and profit margins – as it has in the past for its GPUs to achieve.

“Nvidia is obviously getting a disproportionate share of the market,” said Daniel Newman, principal analyst and founding partner of Futurum Research. “Even though they work with everyone, companies have difficulty getting products… We need competition, we need supplies.”

AMD said its new chips are now available, and the chipmaker has identified several hardware companies, including Dell Technologies Inc. DELL, -2.40% Lenovo 992, -2.97% and Supermicro SMCI, -3.63% that they offer will be their systems. Some cloud customers are also getting involved, including Microsoft Corp.’s MSFT, -1.00% Azure and Oracle Corp.’s ORCL, -2.18% cloud business.

Analysts expect AMD’s chips to gain a foothold in the AI ​​market because they can currently offer customers lower costs and, in some cases, higher performance than Nvidia. Gartner’s Dekate noted that the MI300X chips have much larger memory capacity, which will save customers money across many workloads.

“You can run models of the same size faster and in many cases with fewer resources,” he said. “That’s a big difference. That storage capacity is really important and really a differentiator.”

AMD’s presence won’t change things overnight, and the market certainly doesn’t expect that to happen. Shares of Nvidia fell 2.3% on Wednesday, while shares of AMD fell 1.3%. Nvidia will also push back the target again with its next offerings, noted Dekate. “But today AMD has a compelling offer.”