Nvidia has developed a remarkable business model over the past two decades. In 2006, the company introduced its CUDA developer platform, providing developers with tools to program its GPUs for application acceleration. This gave Nvidia’s chips an edge over competitors. By the late 2010s, CUDA had become the standard for GPU acceleration in deep learning, making it difficult for users to switch to other GPUs and effectively locking them into Nvidia’s ecosystem. This dynamic has helped Nvidia become a $3 trillion company. However, historical cycles show that competition for GPU dominance will intensify, potentially allowing another company to surpass Nvidia.
Advanced Micro Devices (AMD) is often overlooked in the race for AI GPU dominance. Nvidia holds at least an 80% market share for AI GPUs, with some estimates reaching 90% or higher. Yet, historical shifts in chip leadership suggest that dominance can change rapidly. For instance, in 2006, Intel led in graphics chips with a 40% market share, followed by AMD and Nvidia. By 2007, Nvidia had surpassed AMD. Similarly, in 2021, Intel held a 64% share of data center chips, but by 2023, Nvidia had surged ahead.
AMD is investing heavily to compete in AI over the long term. Last quarter, it released the MI325X AI accelerator chip, competing directly with Nvidia’s H200 GPUs. AMD also unveiled its next-generation MI350 chips, set to rival Nvidia’s Blackwell chips by mid-2025. AMD’s CEO, Lisa Su, aims for the company to become the “end-to-end” AI leader within a decade. While Nvidia currently offers superior chips and an integrated hardware-software ecosystem, AMD is making strides with customers. Microsoft and Meta Platforms have signed on as clients for AMD’s MI300 AI GPUs.
AMD estimates the total addressable market for AI chips will reach $400 billion by 2027. With combined AI data center chip sales of just over $30 billion today, there is ample room for AMD to grow significantly, even if Nvidia remains dominant. While overtaking Nvidia in five years will be challenging, AMD remains a promising AI GPU investment.
— news from The Motley Fool