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AMD and NVDIA Vie for GPU Dominance, Intel Poses a Threat

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The demand for Graphic Processing Units (GPUs) is expected to remain robust backed by growing proliferation of AI and ML tools in industries like gaming, automotive, blockchain and cloud computing.

Notably, growth in the gaming hardware market is driving demand for GPUs. Per Allied Market Research, the GPU market is anticipated to hit $157.1 billion by 2022 at a CAGR of 35.6% between 2016 and 2022.

Moreover, per IDC data as confirmed by DisplayDaily, worldwide market for gaming desktops, monitors and notebooks is projected to improve 8.2% on a year-over-year basis. Almost 42.1 million devices are expected to be shipped in 2019.

GPU Market Duopoly Threatened By Intel

Advanced Micro Devices (AMD - Free Report) and NVIDIA (NVDA - Free Report) are the two companies currently dominating the discrete GPU market.

Notably, per first-quarter 2019 JPR data, AMD’s market share in discrete GPU shipments came in at 22.7%, up from 18.8% reported in the fourth quarter of 2018. Consequently, NVIDIA’s market share declined to 77.3% from 81.2% in the same period.

Both AMD and NVIDIA are trying to lure away enterprise customers with their innovative offerings. Moreover, both the companies are strengthening their portfolios to counter increasing competition, especially from Intel (INTC - Free Report) which intends to disrupt the GPU market.

In fact, Intel’s strong installed base, integrated graphics card expertise and enhanced IP portfolio, is anticipated to help it gain market share from incumbents.

Year to Date Price Performance

AMD Lowers Prices to Gain Market Share

AMD’s expanding GPU portfolio catering to every price points is a threat to NVIDIA’s dominance. The company recently rolled out Radeon RX 5700 series graphics cards developed on latest RDMA gaming (or Navi) architecture. The three variants of new GPUs include, $449 priced 50th Anniversary Edition Radeon RX 5700 XT, $399 worth Radeon RX 5700 XT and RX 5700 for $349.

Reportedly, AMD slashed prices of RX 5700 XT and RX 5700 by $50 and $30, respectively, to preserve its expanding presence in discrete GPU market against NVIDIA. This also challenges NVIDIA’s GeForce RTX 2060 and latest GeForce RTX 2060 SUPER priced at $349 and $399, respectively.

AMD’s growing market share is compelling NVIDIA to trim GPU prices or enhance capabilities while maintaining the same rates. However, the price war bodes well for the end-consumers.

Nevertheless, it is likely to take a toll on NVIDIA’s profitability.

Performance War Between AMD and NVIDIA Heats Up

AMD’s latest processors utilize RDNA architecture, are compliant with PCIe 4.0 and offer high-speed GDDR6 memory. The company claims that RDNA offers higher performance on a per-clock and per-watt basis over AMD’s prior Graphic Core Next (GCN) architecture.

In a bid to provide immersive 1440p gaming experience, AMD’s new GPUs are integrated with Radeon Image Sharpening (RIS) which enables high-resolution display. Meanwhile, FidelityFX capability allows developers to improve gaming with robust post-process effects. Moreover, Radeon Anti-Lag functionality reduces input lag time by approximately 31%.

Further, in order to encourage adoption, AMD is offering complimentary Microsoft (MSFT - Free Report) Xbox Game Pass for PC for three months, with Radeon RX 5700 Series of GPUs and other select products.

However, NVIDIA is enabling ray tracing backup to several GeForce GTX GPUs, including recently launched Turing-based gaming cards, which is a matter of concern for AMD. NVIDIA’s latest GPUs make real-time ray tracing more accessible and are expected to deliver up to 25% faster performance than the current versions.

NVIDIA’s Turing GPU and its real-time ray tracing technology are witnessing a massive adoption. Markedly, the company is also benefiting from the adoption of real-time ray tracing in the professional visualization markets.

Intel’s Entry to Disrupt GPU Market Further

Intel is optimistic about its foray into the GPU market with Xe graphics family of discrete GPUs, dubbed Arctic Sound. The semiconductor giant’s decision to hire Tom Peterson, former director of technical marketing at NVIDIA, is a step toward that direction.

Intel also acquired Hyderabad, India-based Ineda Systems, a fabless chip maker, to accelerate its discrete GPU business initiatives. The company’s efforts to penetrate the discrete GPU market, is likely to threaten the AMD-NVIDIA duopoly significantly.

Bottom Line

The product ramp-up with intelligent pricing is expected to stimulate AMD’s growth prospects and reinforce competitive position in the graphics market. Although, AMD is one-up on pricing parameters, NVIDIA’s GPU functionality remains a tough nut to crack.

Intel’s impending entry into GPU market is likely to disrupt the GPU market with possible further reduction in pricing parameters.

AMD, NVIDIA and Intel carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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