In 2023, the semiconductor sector has experienced remarkable success, largely propelled by soaring demand for high-performance chips driven by the relentless growth of artificial intelligence (AI).
At the heart of this surge are graphics processing units (GPUs), the powerhouse behind large-scale computers processing data for cutting-edge AI services such as OpenAI‘s ChatGPT and Google Bard.
Unlike conventional central processing units, GPUs are finely tuned for the complex mathematical computations intrinsic to AI, showcasing their unparalleled efficiency in powering the dynamic landscape of AI-driven technologies.
Nvidia dominating the data center market
As the popular tech investing X account AITechInvesting highlighted in a November 27 post, the GPU demand “continues to be the driving force” in the chip industry.
With that being the case, Nvidia (NASDAQ: NVDA) is miles ahead of its rivals. Why? Simply because the chip and cloud computing giant controls roughly 80% of the GPU market, according to analysts.
This can be noticed from Nvidia’s strong share in the data center market, which is currently leaving its rivals AMD (NASDAQ: AMD) and Intel (NASDAQ: INTC) in the dust.
As of Q3 2023, Nvidia’s data center market share stood at 72.8%, compared to Intel’s 19.1% and AMD’s 8%, indicating a striking discrepancy.
The divergence in market shares between Nvidia, Intel, and AMD became noticeable in Q4 2022, coinciding with the surge in demand for ChatGPT and other GenAI solutions.
During that period, Nvidia’s data center market share was a modest 36.5%, before doubling in subsequent quarters. Intel initially held a stronger position with a Q4 2022 market share of 46.4%, above Nvidia. However, the company’s presence in the sector began diminishing rapidly. AMD, too, experienced a decline, with its market share dropping from 17.1% in Q4 2022 to the current 8%.
AMD’s MI300 could shake up things
According to AITechInvesting, demand is expected to stabilize when AMD unveils its MI300 GPU and “demand for AI applications becomes clearer.”
Furthermore, the so-called ‘hyperscalers’ (large cloud service providers) believe the MI300 could become a competitor to Nvidia’s high-end chips, which would provide them with “ a more diversified supply chain and negotiating power with Nvidia.”
In terms of these companies’ stock performance, NVDA remains far ahead of INTC and AMD. The Santa Clara, California-based company’s shares rocketed almost 240% in 2023, compared to Intel’s and AMD’s gains of 65% and 91.6%, respectively.
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