As a technology arms race intensifies, AI dominates the news cycle. Microsoft (NASDAQ: MSFT) led the field with its investment in OpenAI, but Alphabet (NASDAQ: GOOGL), Meta (NASDAQ: META), and the rest of big tech have all tried their hand at AI with varied degrees of success.
No business has done AI as well as Nvidia (NASDAQ: NVDA). The semiconductor titan makes GPUs for most power-hungry AI apps. Their speed and efficiency make them the industry standard. The chipmaker's shares surged about 200% in the last year, making it the third-largest firm by market cap. Nvidia's Grace Blackwell "superchips." announcement excites investors. The initial iteration, the GB200, will reduce power usage by 25-fold and speed up some AI applications by 30-fold.
Room for more? While Nvidia dominated AI semiconductors and certainly will, it is not the only participant. The market will be huge, say analysts. Grand View Research expects the AI market to reach $1.8 trillion by 2030, growing 37.3% annually. Competition will boost AI growth for many organizations. Investors should monitor these two.
AMD AMD shares have underperformed Nvidia's advances, but everything is relative in this market. The returns remain remarkable. The stock rose over 72% last year. AMD will sell $12.3 billion in 2025 with 10% of the AI GPU market, according to HSBC analyst Frank Lee. Growth would be enormous. Data center revenue, which includes AI chips, was $6.5 billion in 2023.
AMD's GB200 competition is a serious problem. Some say the company's flagship AI GPU, the MI300, isn't as spectacular. AMD plans to release a more powerful CPU to compete with Nvidia's GB200. This is speculation at this stage. AMD may not match the GB200 or Nvidia may move on to its next upgrade.
Intel Intel (NASDAQ: INTC) ruled semiconductors until AI. CPUs are the company's specialty, not GPUs. CPUs are more versatile than GPUs, which excel at certain tasks, and are still used in laptops.
Thus, Intel missed most of the AI wave. A modest 17% increase in its stock in the past year. However, Intel won't just wait. The Gaudi 3 is the company's latest AI chip. Intel claims the processor will provide "50% faster time-to-train" for some AI applications and 40% more power efficiency than Nvidia's H100. Intel scored heavily, but Gaudi 3's performance against the HB200 remains to be seen.
Intel also promotes "AI everywhere." The fifth-generation Xeon CPUs will have "AI acceleration" in every chip. Certain AI programs will use the most powerful CPUs available. AI investors should watch Intel.
Investor takeaway Nvidia will undoubtedly continue to dominate the market, but AMD and Intel could grow significantly if they can capture a fraction. Due to their extensive histories of success and market size, both companies are likely worth a study.