Advanced Micro Devices Has Finally Beaten NVIDIA on One Front

The unthinkable has happened. Advanced Micro Devices (AMD) has actually outperformed NVIDIA (NVDA) over the past few months. Advanced Micro Devices’ shares are up almost 100% from its year to date lows, whereas NVIDIA has also continued performing nicely, but hasn’t delivered as high of gains as its rival.

That being said, AMD’s rally was fuelled by its one-off quarterly results and there’s still a long way to go before the stock’s fundamentals can justify its rally.
As for NVIDIA, the company has continued performing terrifically and is not as risky as AMD. While both the stocks are overvalued, I think NVIDIA is still a buy and a safer stock for the long run.

Why IBM matters

NVIDIA will probably launch its new graphics card GTX 1080 grounded on its new Pascal architecture. The company has formerly taken the lead over its foremost rival AMD, as AMD is still on its way to launch its new Polaris architecture. NVIDIA’s GTX 1080 will mainly focus on the high-end of the graphics cards market. Moreover, GTX 1080 will be priced at half the cost and run twice as compared to NVIDIA’s most popular Titan GPU.

On the official website of NVIDIA, the company claims that GTX 1080 will deliver twice the performance of Titan X in the case of virtual reality based applications. However, the virtual reality market is still at its infant stage, but the company believes that this market will grow at a better than expected rate. Therefore, the company is paying more attention to the virtual reality market.

Moreover, the company has improved the performance of this new graphics in such a way that it can perform more efficiently for popular games such as the Call of Duty series and Star Wars Battlefront.

Apart from this, IBM recently publicized that it will use NVIDIA’s Tesla M60 GPU accelerators for its cloud-based enterprise clients. With the help of NVIDIA’s high-end and efficient GPUs, IBM will offer the companies to install fewer, more powerful cloud servers though blending through complex jobs quicker.

For NVIDIA, Tesla GPUs used for cloud computing can aid the company to nurture its business further than the high-end PC graphics cards market. In the most recent quarter, the company’s revenue generated from data centre segment surged 63 percent, and accounted for 11 percent of NVIDIA’s overall revenue.

NVIDIA’s Tesla GPUs also link to the company’s Tegra CPUs, which are presently being used in infotainment systems and its end-to-end solutions for autonomous cars. The company’s partnership with IBM also matches its alliance with Facebook, which used Tesla M40 GPUs in its Big Sur computing platform for AI tasks in 2015.


While AMD’s rally has been fuelled by its one-off earnings, NVIDIA is consistently venturing down new paths to sustain its growth. Going forward, I think NVIDIA is a much safer stock to buy than AMD and investors who have benefited from AMD’s recent rally should look to exit the stock before it crashes.
Published on Jun 1, 2016
By Prudent Investor

Copyrighted 2020. Content published with author's permission.

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