Should Nvidia investors worry about further downside following rival company announcements?
Nvidia (NVDA -2.68%) Last month, the company's stock price soared to a record high of $974 on March 8th. But investors haven't had much reason to rejoice since then, as the red-hot stock has since died down.
More specifically, Nvidia stock is currently trading just over 11% below its all-time high. Wall Street is worried that the company's growth in artificial intelligence (AI) could disappear as the stock market bubble bursts and increased competition in the AI chip market. So it was no surprise that the following day, on April 9th, Nvidia stock fell another 2%. intel's (INTC -5.16%) The launch of a new AI chip aimed directly at Nvidia's hottest companies.
Let's see if NVIDIA investors have reason to worry following Intel's latest move to target the fast-growing AI chip market.
Intel aims to take advantage of Nvidia's AI
Intel is trying hard to enter the AI chip market in earnest, but its efforts are still slow. According to CEO Pat Gelsinger, the potential revenue pipeline from Intel's AI chips by the end of 2023 is “well over $2 billion and growing.” This pales in comparison to Nvidia's $47.5 billion in data center revenue for his fiscal year 2024, and shows that the company is far ahead of Intel in the AI chip market at this point.
But Chipzilla is taking a new challenge to Nvidia's AI dominance with its latest Gaudi 3 accelerator. The press release announcing the launch noted that the new Intel chips “deliver an average of 50% better inference and an average of 40% better power efficiency than the Nvidia H100 at a fraction of the cost.”
The press release further states that Gaudi 3 can estimate an estimated reduction in training time for Llama2 large-scale language models (LLMs) with 7 billion and 13 billion parameters, and GPT-3 models with 175 billion parameters. added. 50%. Intel added that multiple companies will deploy his Gaudi accelerator and server maker. Dell Technologies, super microcomputer, lenovoand hewlett packard enterprise is also expected to offer systems based on this new chip.
Additionally, Intel claims Gaudi 3 could match the performance of Nvidia's upcoming H200 AI graphics processing unit (GPU). Considering it is equipped with Intel's latest AI chip. taiwan semiconductor manufacturingThis is not surprising since the manufacturing process for is 5 nanometers (nm). That's because Nvidia's current flagship H100 is manufactured using TSMC's custom 5nm process.
Additionally, Nvidia's upcoming H200 processors will also be based on the N5 process, which refers to TSMC's 5nm process node. So investors are wondering if Intel could actually make inroads into his Nvidia's dominant position in the AI chip market thanks to a combination of aggressive pricing and solid performance. Maybe.
However, investors should note that Nvidia's H100 GPU was announced several years ago and entered mass production in late 2022. Intel's Gaudi 3 chips are expected to enter mass production in the third and fourth quarters of 2024. But Nvidia would have been in an even better position if it had shipped these chips by the time Intel started mass production.
Getting rid of Nvidia is easier said than done.
Nvidia announced its Blackwell GPU architecture last month, saying the new platform “allows organizations everywhere to build and generate real-time generative AI with large language models with trillion parameters at up to 25x less cost and energy consumption than before.” It can be done,” he claimed.
Additionally, the Blackwell B200 GPU is expected to be 4x faster than the H100 during AI training and 30x faster during inference. The significant performance improvement of his B200 compared to the previous generation of his Nvidia GPUs can be attributed to the advanced his 4nm process node on which the chip is built.
Even better, Nvidia will reportedly price its Blackwell processors aggressively. Also, given the performance and efficiency improvements promised by Nvidia, the cost benefits promised by Intel may be mitigated. All of this explains why you should choose leading cloud computing providers such as: Amazon, alphabetGoogle, meta platform, microsoftand oracle Deployment of the B200 is expected.
Nvidia has said chips based on its Blackwell architecture are expected to launch later this year, signaling the company could steal Intel's thunder and maintain its dominant position in the AI chip market. Suggests. Not surprisingly, Nvidia's data center revenue is expected to double in 2024 to $95 billion, according to analyst estimates.
This suggests that the market expects Nvidia to continue its leadership in the AI chip market, where it reportedly holds more than 80% share. Therefore, investors should hold off on announcing Intel's AI chips. That's because the new Gaudi 3 processor may not pose as much of a challenge for NVIDIA, considering that the company plans to move to a new generation of more powerful and efficient chips.
Alphabet executive Suzanne Frye is a member of The Motley Fool's board of directors. John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool's board of directors. Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool's board of directors. Harsh Chauhan has no position in any stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, Oracle, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Intel and recommends the following options: Long January 2023 $57.50 calls on Intel, Long January 2025 $45 calls on Intel, Long January 2026 $395 calls on Microsoft, Short January 2026 $405 calls on Microsoft. call, and a May 2024 $47 short call. Intel. The Motley Fool has a disclosure policy.
