It has been a difficult year for the stock market as a whole, and both AMD and Nvidia have been severely affected by the cryptocurrency crash in recent months. According to MarketWatch, AMD finished 2018 as the best-performing stock on the S&P 500, with an increase of 79.6%. And the company was added to the Nasdaq-100 index just recently.
In contrast, the stock of AMD’s graphics-chip competitor Nvidia performed poorly. The stock price of Nvidia plummeted at the end of the year after achieving record highs over the past few years. According to CNBC, Nvidia stock’s 54 percent decline in the fourth quarter made it the worst-performing S&P 500 company during that time.
To be fair, AMD fell 40.2% from its September high as the year came to a close. Nvidia’s business is closely tied to demand GPUs, whether for gaming, AI, or autonomous driving.
AMD is also receiving a boost from Intel’s recent difficulties, which include (but are not limited to) difficulties reaching mass production on its 10nm node, a shortage in 14nm production as a result, and spending the second half of the year searching for a new long-term CEO.
Intel’s stock has risen less than half a percent year-to-date, despite the company’s numerous difficulties. Not being heavily involved in graphics helped the company avoid the fourth-quarter woes that plagued both AMD and Nvidia, though the company does intend to enter the dedicated graphics market by 2020 with its Xe line. Intel was also buoyed by healthy data center growth, although it is still unclear to what extent the US-China trade war will harm the market in China—and elsewhere.
AMD appears to have an excellent opportunity in 2019 to increase its CPU market share while Intel resolves its multiple issues. And the forthcoming Navi architecture could help it combat Nvidia in the mainstream/midrange graphics market (which is where most of the volume and profit are).
But make no mistake: AMD still faces an uphill battle against its two primary competitors, primarily due to its diminutive size. Being the David battling two Goliaths is undoubtedly beneficial to a company’s public image. But Nvidia’s $81.44 billion market capitalization dwarfs AMD’s $18.45 billion. And Intel’s market value of $219.55 billion is in a league of its own.
In other words, even though AMD has been able to recover from bankruptcy in recent years thanks largely to its Zen architecture, it invests significantly less in research and development than its competitors, a large portion of its high-level talent has defected to Intel, and it must continue to string together successes if it wants to reach the level of dominance occupied by Nvidia and Intel, despite their issues.
Nvidia and Intel, in particular, are better positioned to withstand market fluctuations and product issues. Nvidia is more vulnerable due to its reliance on the GPU market; however, it has been expanding its focus within this industry for several years. In contrast, AMD has had less success in growing markets such as artificial intelligence, enterprise graphics, and automotive. While AMD’s momentum is undeniable, a significant setback could still eliminate the underdog from contention.