What AMD needs to do to break Nvidia’s stranglehold on AI

How AMD can capitalize on their strong performance to challenge Nvidia

News By Dr Seena Rejal published 27 November 2024

Nvidia has dominated the semiconductor industry for years, making it nearly synonymous with artificial intelligence (AI) hardware. From self-driving cars to cutting-edge research, Nvidia’s high-performance graphics processing units (GPUs) are the gold standard in AI. The company’s grip on the market has long seemed unbreakable–until recently.

In October, Advanced Micro Devices (AMD) entered the market by unveiling its own AI chip aimed squarely at challenging Nvidia’s GPU monopoly. Since then, AMD has outlined an ambitious roadmap to expand its AI hardware portfolio over the next two years, positioning itself as a worthy competitor to Nvidia’s dominance. These are promising signs of an evolving landscape–but what can AMD do to tilt the scales in their favor?

Dr Seena Rejal

CCO at NetMind AI.

The state of play

The semiconductor sector is starting to pay attention to the shifting market dynamics - as seen by AMD’s highly anticipated third-quarter results. A surge in data center revenues—up by 122%—indicates that AMD’s push into AI hardware is more than just a symbolic move. AI chip sales alone are expected to reach $5 billion this year, a promising signal for AMD as demand continues to outstrip supply.

Despite these gains, AMD faces an uphill battle against Nvidia. Global semiconductor supply chains remain strained, especially at TSMC, the world’s largest chip manufacturer on which both AMD and Nvidia rely. An established customer base suggests that Nvidia will likely retain its lead in the foreseeable future, souring future projections for AMD.

AMD CEO Lisa Su’s task now is to focus on the promising strides AMD has made to put the company in pole position to challenge Nvidia’s dominance in the market.

Disrupting the status quo

If AMD is successful, this disruption will likely have far-reaching implications for the tech industry. Nvidia’s dominance has meant high costs and limited options for smaller tech firms and startups. Through my work with NetMind.AI, I've seen firsthand how essential affordable and accessible AI hardware can be for companies with limited budgets - for many vital innovators in the space, low-cost chips are essential. By opening up a more cost-competitive landscape, AMD’s entrance could be transformative for smaller players who need AI capabilities but have previously been priced out of the market.

To mount a credible challenge to Nvidia, AMD must focus on three essential areas: technological performance, price competitiveness, and enabling AI-driven commercial applications. If AMD can deliver on these areas, it could spell a new era of AI accessibility and affordability.

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