Why AMD’s Latest Win Should Give NVIDIA Sleepless Nights

Advanced Micro Devices (NASDAQ:AMD) and NVIDIA (NASDAQ:NVDA) have been locked in an intense battle for GPU (graphics processing unit) supremacy. AMD has momentum on its side as its market share has shot up to almost 30% from just 18.8% in 2015, thanks to its focus on selling budget GPUs.

AMD now wants to take itself a notch higher, which is why it is targeting the high-end GPU space with the new Vega GPUs for consumer and professional grade PCs. But this isn't the only front where the chipmaker is looking to engage NVIDIA. AMD's latest contract win indicates that it is now making inroads into the lucrative data center business that's been a big catalyst for NVIDIA so far."

 

"Cloud services leader Amazon has decided to tap AMD's FirePro server GPUs and its multi-user GPU technology to power its Graphics Design instance type. The Graphics Design instance type will allow users of Amazon AppStream 2.0 to run graphics applications in the cloud while reducing the cost of streaming such applications by as much as 50%."

 

"Alibaba is another cloud computing player that has decided to tap AMD's technology for deployment across its data centers globally. This was after Alibaba had signed a strategic pact with NVIDIA in early 2016 to offer GPU as a service."

 

AMD's EPYC server chip could be another catalyst

"AMD enjoys an advantage over NVIDIA thanks to its recently launched server chip -- EPYC. This new server CPU (central processing unit) has received a good response from OEMs (original equipment manufacturers) and CSPs; AMD claims that it can outperform rival chips from Intel.

In fact, AMD has already tied up with key cloud players in China such as Tencent and JD.com, as well as infrastructure providers such as Sugon and Lenovo for its EPYC server CPUs. In all, the company claims to have received commitments from 20 companies for the new chip. These partnerships could be a gold mine for AMD as China's data center market is expected to clock an annual growth rate of 13% until 2020.

Therefore, AMD will have the opportunity to cross-sell its FirePro GPUs to its server CPU customers. This could knock the wind out of NVIDIA's data center sales, as AMD looks set to win more market share provided its execution is as strong as it has been in the PC business."

 

Why AMD’s Latest Win Should Give NVIDIA Sleepless Nights -- The Motley Fool