Nvidia Holds Steady Amid AMD and Intel's AI Chip Market Slide
AMD and Intel shares plummeted nearly 4% on August 19, while Nvidia's stock remained steady. The disparity in performance between the three chipmakers highlights the challenges they face in the AI chip market.
The decline in AMD and Intel shares began with rising interest rates. On August 18, the 30-year Treasury yield reached a 20-year high of 5.33%, making it harder for expensive chip stocks to justify their growth assumptions. AMD's stock price had already surged to $580.91 on June 30, only to slide back down to the mid-$400s in August.
Intel also faced its own challenges, having priced a $20 billion stock offering at $95 a share on August 11. This move diluted existing shareholders and raised concerns about the company's turnaround efforts.
The AI chip market is becoming increasingly competitive, with Google expanding its custom-chip relationship with Marvell. The partnership gives Google a warrant to buy up to 58 million shares of Marvell at $206.58 each. This move highlights the biggest AI buyers' desire for more control over the chips inside their data centers.
Nvidia, on the other hand, remains the default choice in the AI market, with a dominant share of discrete AI accelerator revenue and high margins. The company's fiscal second-quarter results are expected to be released after the close on August 26, which will provide further insight into its performance.