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Nvidia Dominates AI Chip Market


Nvidia Corp. continues to consolidate its dominance in the AI chip market, with Advanced Micro Devices Inc. ranking in second place. This situation is reminiscent of the competition between AMD and Intel Corp. in the server market a decade ago.

A third-party assessment of AMD’s and Nvidia’s previous generation AI chips revealed that AMD’s hardware was around 80% as fast as Nvidia’s. The same advantage is expected for Nvidia’s H100 versus AMD’s MI300. Analyst Christopher Danely from Citi Research predicts that Nvidia will maintain a substantial advantage in AI performance and market share over AMD in the future due to its superior speed and ecosystem.

Nvidia shares have experienced a remarkable 186% rally in 2023, driven by the promise of capitalizing on artificial intelligence models such as OpenAI’s ChatGPT, backed by Microsoft Corp. AMD, not far behind, has seen a 72% gain in its shares.

Both Nvidia and AMD have introduced new AI chips this year, with Nvidia launching its product in March and AMD following suit shortly after.

The Citi analyst expects Nvidia to maintain at least a 90% share of the AI graphics market in the future, drawing parallels with the Intel vs. AMD competition from a decade ago, where Intel’s better performance and ecosystem resulted in over 90% market share.

On Monday, both Nvidia and AMD shares experienced marginal declines of more than 1%, while the PHLX Semiconductor Index rose by over 1%. Meanwhile, the S&P 500 index remained flat, and the tech-heavy Nasdaq Composite Index registered a 0.3% decrease.

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