What an AMD deal with Tesla would mean for Nvidia and Intel

AMD is cutting into Nvidia’s early lead in artificial intelligence for cars.

Jim Keller, a former AMD

AMD, -2.00%

chip designer, now works at Tesla

TSLA, -2.13%

(Keller also previously worked at Apple

AAPL, -1.39%

) The news is that Tesla is working with AMD on a new custom artificial intelligence chip at the expense of Nvidia

NVDA, -2.36%

To be sure, a Reuters report said there’s no formal agreement.

Still, let’s explore the dynamics among AMD, Nvidia and Intel

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Chart

Please click here for an intraday annotated chart of AMD. The most important information for investors to glean from the chart is that the VUD indicator stays strongly green as AMD’s stock price traces an explosive move up. The VUD indicator is the most sensitive measure of supply and demand in real time. Typically when AMD moves up on news, the VUD indicator first becomes green and then turns orange. Green indicates net buying; orange indicates net selling. This happens because as the momo (momentum) crowd runs up the stock, the “smart money” typically sells into the strength.

Read: The YouTube channels for investors to watch now

Please note from the chart that during the latest AMD price move, the VUD indicator stayed green throughout. There was no selling by the smart money into the strength, as has been the case in the past.

Ask Arora: Nigam Arora answers your questions about investing in stocks, ETFs, bonds, gold and silver, oil and currencies. Have a question? Send it to Nigam Arora.

Not a surprise

At The Arora Report, the news is not a surprise. It was anticipated for the following reasons:

• It is a good practice for companies to not become totally dependent on chips from one company. Companies often seek to diversify.

• It is only a matter of time before Tesla will be competing with electric cars from BMW

BMWYY, +0.59%

Daimler

DDAIF, +0.24%

GM

GM, +0.58%

Ford

F, +0.17%

and Toyota

TM, -0.19%

It behooves Tesla to develop its own intellectual property. Here Tesla is using AMD intellectual property to design a custom chip. In the process, Tesla will build significant intellectual property of its own.

• AMD had a relationship with an ex-staffer now at Tesla.

Financial impact

There is no significant financial impact on AMD and Nvidia.

Sentiment

Stocks often move on sentiment. The news boosts sentiment on AMD. The sentiment on Nvidia should be dented, but expect the effect to be mild as Wall Street analysts rush to defend Nvidia. Many Wall Street analysts have “buy” ratings on Nvidia, hence they are predisposed to defending Nvidia.

Bad day for Intel

The simple fact that, in spite of its significant efforts, Intel was not able to get in Tesla but AMD did, makes for a bad day at Intel.

Should you buy AMD, Nvidia or Intel?

The best way for investors to decide on which stocks to buy is to focus on potential risk-adjusted returns.

In plain English, it means returns in excess of those commensurate with the risk taken. For example, Nvidia could go to $250 but it could also fall to $90. As such, risk in Nvidia is fairly high. In contrast, the probability of getting the same return as Nvidia in Intel is lower but the risk is also lower. Intel also pays a nice dividend.

Nigam Arora on Tesla: Is the stock too expensive? Try these alternatives

The Arora Report provides clear signals based on risk-adjusted potential on these stocks to buy, sell or hold including buy zones, target zones, stop zones and appropriate quantities. All of the stocks mentioned here move on the news, and sentiment can shift on a dime. For this reason, it is important for these positions to be reviewed regularly, investors to stay nimble and have protective measures in place. The objective of investors should be to consistently make money and avoid the yo-yo of making money and then losing it.

Disclosure: Subscribers to The Arora Report may have positions in the securities mentioned in this article or may take positions at any time. All recommended positions are reviewed daily at The Arora Report.

Nigam Arora is an investor, engineer and nuclear physicist by background, has founded two Inc. 500 fastest-growing companies, is the developer of the adaptive ZYX Global Multi Asset Allocation Model and the ZYX Change Method to profit from change in trading and investing. He is the founder of The Arora Report, which publishes four newsletters. Nigam can be reached at Nigam@TheAroraReport.com.

Nvidia: Nevermind AMD ‘Noise,’ They’ll Be Fine, Says RBC

RBC Capital Markets chip analyst Mitch Steves this evening reiterates an Outperform rating on shares of Nvidia (NVDA), and a $205 price target, urging investors to “ignore the noise” about competitor Advanced Micro Devices (AMD) having apparently won some business with Nvidia customer TeslaMotors (TSLA).

CNBC reported late this afternoon that AMD is working with Tesla to develop a chip for “A.I.” functions of a self-driving car. Tesla is already a customer of Nvidia’s.

Noting that the report is thus far “unsubstantiated,” Steves concludes that Nvidia may no longer be the sole source of chips for Tesla, but that’s okay because they can remain the “market leader” even as AMD picks up some share:

Nvidia no longer the sole provider of chips). While we think this makes sense from a strategic perspective it will unlikely result in a single source dynamic (where Tesla only works with AMD). Instead, we view this announcement as similar to dynamics we anticipate to occur in the Data center: AMD winning some share while NVDA remains as the de-facto standard and market share leader. Recall, NVDA has content at multiple companies ranging from Uber to Toyota. Importantly, we anticipate seeing more positive announcements from AMD particularly around the Data Center but Nvidia will likely remain as the market share leader. Net Net: we view the announcement as a near-term concern that should not impact the story over the next several years. AMD will likely gain some share both in auto and DC but we believe Nvidia will remain as the market share leader.

The graphics processing unit, or “GPU,” sold by Nvidia, will probably remain the main chip for Tesla, he opines:

It is important to note that the announcement is with AMD and not with a systems company (such as INTC/Mobileye). This suggests the value for AI/self-driving remains with the GPU. We think Tesla will use Nvidia chips for the majority of the AI workloads, while some AMD chips will be develops for specific computing jobs. This would allow the company to vertically integrate the chips (keeping more IP in-house) and does not suggest that NVDA will lose content in the future. Overall, we think Nvidia remains as the primary workhorse/engine while AMD chips are used for specific applications to avoid giving Nvidia 100% of the AI content in self-driving vehicles

And the big takeaway, according to Steves, is that “the value of AI chips is continuing to increase which is causing companies to look in some instances to dual source.”

Nvidia stock is down $6.67, or 3.6%, at $179.17, in late trading.

See also: AMD and Tesla: ‘Double Slap’ at Intel, Says Rosenblatt, September 20th, 2017.

Can Nvidia and AMD Beat the Bitcoin slump?

Unless you’ve been in a coma for the last few years, you know that both Nvidia Corporation (NASDAQ:NVDA) and Advanced Micro Devices, Inc. (NASDAQ:AMD) introduced cryptocurrency-mining specific GPUs. Recently, in a direct contradiction to earlier momentum, Bitcoin and the cryptocurrency markets are receiving a thrashing. Now deep into correction territory, the crypto investor’s focus has shifted from hitting new plateaus to salvaging whatever they can. Hardened veterans understand that extreme volatility comes with the territory, but what about chip makers, Nvidia and AMD? ?

Bitcoin

Source: Shutterstock

As a quick refresher, mining is an algorithm-heavy process where computers compete to verify blocks of transactional data. The first to verify the data receives a cryptocurrency unit, such as Bitcoin, as a reward.

As you might expect, mining is an intensive process. Furthermore, the competition becomes all the more fierce as the mined cryptocurrency rises in value. If you have a slow computer, you are virtually guaranteed to waste a lot of electricity for nothing. To gain an edge, miners elect to use ultra-powerful GPUs. The top sellers are AMD and Nvidia.

Naturally, as Bitcoin prices soared to the moon, interest also shifted to NVDA stock and AMD stock. While not direct investments towards cryptocurrencies, their respective associations cannot be denied. AMD admitted as such in June of this year, and for good reason. Their primary focus is on their core gaming sector, but nobody turns down free money.

But now, as Bitcoin prices erode, the association is an unfavorable one. After the “king of cryptos” first hit $1,000 and then went on to collapse, it took down Nvidia and AMD. Potential miners got a case of the weak knees and fled to the nearest exit.

Could the same thing happen again?

Nvidia and AMD can Weather the Bitcoin Storm

Before I say no, I fully disclose the fact that I’m a strong advocate for cryptocurrencies. As evidence, I was one of the first people, along with my colleague Dana Blankenhorn, to speak consistently about Bitcoin and the blockchain on InvestorPlace. Furthermore, I’ve been buying this crypto slump, and will continue to do so.

Despite my obvious propensity for the digital markets, I still believe, for lack of a better phrase, that “this time is different.” I don’t think current shareholders of either NVDA stock or AMD stock have anything to worry about regarding cryptocurrencies. Here’s why:

First, when GPU sales for Nvidia and AMD took a hit after Bitcoin’s mercurial boom-bust cycle in 2013 and 2014, the concept of digital coins was very much a new phenomenon. GPUs weren’t marketed specifically for crypto mining; rather, it just happened that miners used Nvidia or AMD devices. Moreover, these chips weren’t necessarily efficient or effective for mining. Competing technologies ultimately hurt GPU sales at that time, not slumping Bitcoin prices.

Second, no correlation appears to exist among Nvidia and AMD stock, and Bitcoin. For the second half of this year, NVDA stock is up 17%, whereas AMD shares lost 2.5%. What might surprise lay investors is that Bitcoin is actually up 25% since July 1. Yet the most famous digital coin lost 36% over the last two weeks!

These performance metrics are simply all over the place. This dynamic clearly indicates that other factors besides cryptocurrencies impact Nvidia and AMD stock.

Finally, I’m not convinced that lower crypto prices weaken Nvidia and AMD processor demand. Corrections weed out the speculators and “Johnny-come-latelys.” This helps true proponents get more bang for their mining buck through competition elimination.

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Is Baidu Dumping NVIDIA for AMD? | Business Markets and Stocks News

The advent of artificial intelligence (AI) and its mass adoption in the tech world has caused a paradigm shift that many companies are feeling — NVIDIA Corporation (NASDAQ: NVDA) has been one of the greatest beneficiaries of these developments. Researchers quickly learned that the same functionality that graphics processing units (GPUs) offer for rendering images in gaming also makes them ideal for AI applications. The ability to process vast stores of data at lightning speeds made GPUs critical to early AI research.

NVIDIA has consistently dominated the market for high-end processors, making it the obvious choice for training AI systems. Chinese search giant Baidu (NASDAQ: BIDU) has one of the most advanced AI programs in China and has long been a user of NVIDIA GPUs. The companies recently announced a far-reaching AI partnership covering everything from cloud computing to self-driving cars.

That’s why it came as something of a surprise when Baidu also announced a collaboration with NVIDIA rival Advanced Micro Devices (NASDAQ: AMD) “on optimizing software for AMD Radeon Instinct GPUs in Baidu datacenters.” 

The NVIDIA DGX-1, the world’s first deep-learning AI supercomputer in a box. Image source: NVIDIA. 

Is the honeymoon over?

While this is AMD’s first serious foray into the AI space, NVIDIA has been aggressively courting the market for years. As a result, NVIDIA’s data-center revenue has increased 174% year over year, on average, in each of the past five quarters. With a lack of any serious competition, NVIDIA positioned itself in the majority of large data centers running AI applications.  

Its customers are a veritable Who’s Who of companies in the big tech world, and its dominance continues today. NVDIA GPUs provide the foundation for all the top cloud computing services, and it reaped the significant financial rewards that came with its early lead.

Taking the fight to NVIDIA

AMD has been aiming for a piece of the high-end GPU market with the release of its new Radeon Instinct line of GPUs, which are geared directly toward high-performance computing and a wide range of machine learning and deep learning applications. This collaboration with Baidu gives AMD some much-needed credibility and establishes the company as a viable competitor in the burgeoning space of AI against a much more established rival.

As my colleague Harsh Chauhan pointed out, tests performed on Baidu’s open-source DeepBench deep-learning benchmarking tool showed that AMD’s Vega GPUs already compare favorably with NVIDIA’s Telsa P100 offering. It remains to be seen if that will hold up with the release of NVIDIA’s upcoming Tesla Volta V100, which is scheduled to make its debut later this year.

The opportunity is staggering

According to a report by Markets and Markets, the AI chipsets market is expected to grow at a compound annual growth rate of 62.9% over the next five years, to $16 billion by 2022.

All in all, a collaboration between Baidu and AMD doesn’t spell immediate trouble for NVIDIA, and its GPUs will still have a prominent position in Baidu’s data centers. NVIDIA has had the field to itself for some time, while others were playing catch-up. Baidu also has a history of partnering with all the top players. With the improvements to its latest high-end GPU’s designed specifically for AI applications, AMD just got a foot in the door.

This is definitely a win for AMD, giving it an official debut in the nascent field of AI, which could open the door for more companies to adopt AMD processors. This could, in turn, put pressure on NVIDIA’s data-center business, which has been the growth engine behind the company’s recent gains. AMD still has a long way to go, however, before it could unseat the reigning champ.

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Nvidia Is Beating AMD in the Artificial Intelligence Race

 
 

No investor-oriented discussion of NVIDIA Corporation (NASDAQ:NVDA) would be complete without comparing or contrasting it with rival Advanced Micro Devices, Inc. (NASDAQ:AMD). Whether you’re talking about processors, graphics cards to be used as actual graphics cars, graphics cards used in “mining” cryptocurrencies, or graphics cards utilized by artificial intelligence applications, each is the other’s biggest threat.

Nvidia (NVDA) Has a Lead on AMD in the Artificial Intelligence RaceCalling a spade a spade, however, Nvidia has pretty much won or at least tied AMD on all the aforementioned fronts, including the AI front.

Some fans and followers of AMD stock will protest that idea, pointing out that while the field of artificial intelligence has made great strides in recent years, the practical AI applications that tap into the power of graphics cards is still mostly in the theoretical stages. That’s not the case anymore, though, at least not for Nvidia. NVDA stock holders can celebrate not one but two different implementations of real, meaningful artificial intelligence that essentially secure the company’s lead in this race.

Nvidia Already is Waist-Deep Into AI

For any Nvidia shareholders who’ve been wondering what sort of practical (read “marketable”) use you could get out of artificial intelligence, here’s your answer: it can be used by General Electric Company (NYSE:GE) to help identify defective or failing equipment used by its customers, and it can be used by Wal-Mart Stores Inc (NYSE:WMT) to help it better compete against Amazon.com, Inc. (NASDAQ:AMZN).

Earlier this month, Avitas Systems, part of GE Ventures, teamed up with Nvidia to develop robotic drones that perform inspections of equipment on top of power-line poles, along pipelines, and even under water. These drones don’t just fly or drive (or swim) themselves to a spot that’s difficult for humans to get to. This network of drones, sensors and cameras doesn’t just perform tasks though. It can reason things out on its own, determining which equipment is more prone to failure under certain scenarios, and make a decision to monitor a situation more closely. Of course, these electronic “eyes” also see things that can’t be detected by human eyes.

It’s Nvidia’s DGX-1 supercomputer serving as the backbone for Avitas’ creation.

As for Wal-Mart, its battle with Amazon.com has been a long and well-documented one, with Wal-Mart generally on the losing end of it. That may be about to change, however. In late August, the retailer announced it would be building its own cloud-based AI network using Nvidia’s graphics cards. The so-called OneOps cloud will be used not just by Wal-Mart, but by other firms in need of artificial intelligence architecture.

It’s a significant shift for Wal-Mart, which has ironically used Amazon Web Services to meet much of its cloud-computing needs. Although it’s not yet clear exactly how Wal-Mart intends to leverage its new in-house technology to combat the growing dominance of Amazon, one can reasonably assume it will use the platform as a means for better determining what customers want and when they want it. In turn, this artificial intelligence tool will ultimately help Wal-Mart get better at tailor-made marketing.

Bottom Line for Nvidia Stock

Point being, while much of the AI buzz that’s surrounded AMD stock was prodded by what its technology may be able to do in the future, Nvidia is doing real artificial intelligence right now.

None of this is to imply Advanced Micro Devices doesn’t have any practical artificial intelligence hardware in use right now; it does. It’s also not to suggest Nvidia’s artificial intelligence opportunity has been fully realized it hasn’t. It’s simply to underscore the reality that Nvidia is winning the race. That in itself makes NVDA the more potent of the two artificial intelligence plays.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter.

AMD, Nvidia Push Semiconductor Revenue Above $100 Billion

The high-flying semiconductor sector hit a new landmark Wednesday with global revenue topping $100 billion for the first time. “Despite a slightly down first quarter, the semiconductor industry achieved near record growth in the second quarter of 2017, posting a 6.1 percent growth from the previous quarter. Global revenue came in at $101.4 billion, up from $95.6 billion in the first quarter of 2017,” according to London-based analytics firm IHS Markit.

“This is the highest growth the industry has seen in the second quarter since 2014,” IHS added.

2017 has been a watershed year for the sector that has benefited from the climbing prices of cryptocurrencies such as Bitcoin and Ethereum, which has pushed semiconductor stocks to record highs. The record revenue jump was led by California-based companies Advanced Micro Devices Inc. (AMD) and Nvidia Corp. (NVDA), which saw quarterly revenue growth of 24.7 percent and 14.6 percent respectively, IHS said. (See also: Buy AMD on New Chip Design: Canaccord Genuity)

While cryptocurrency prices have fallen in recent days, the semiconductor sector looks set to stave off any short term volatility as input prices continue to fall. IHS Market noted a sharp rise in factory automation for discrete power transistors, thyristors, and other semiconductor products which are expected to reach $8 billion in 2021, accord to IHS Markit. Additionally, AMD and Nvidia got a boost Tuesday when analyst firm Jefferies said any weakness in cryptocurrency prices did not pose any short-term risk to either AMD or Nvidia as they shift towards mining specific products.

Source: IHS Markit

While leading the pack in revenue growth, AMD and Nvidia remain well down the list of semiconductor suppliers, which is headed by Intel Corp. (INTC) and Samsung Technologies (SSNLF). The two established players make up close to 30 percent of the market.

However, shareholders of AMD and Nvidia are the ones smiling. In the 12-month period ending September 12, both West Coast based firms have seen their share price more than double.

Will the Plunge in Bitcoin Crush AMD and Nvidia?

A crackdown in cryptocurrencies in China and ICOs (initial coin offerings) has been weighing on bitcoin and other cryptocurrency markets. After nearing the $5,000 mark, bitcoin prices have been plunging, now trading near $3,875. Currently, it’s down 7% or almost $300 per bitcoin thanks to recent comments from JPMorgan Chase & Co. (JPM) CEO Jamie Dimon. He called it a “fraud” and said he would fire any trader at the bank who touched it.

“You can’t have a business where people can invent a currency out of thin air and think that people who are buying it are really smart,” Dimon said at the Delivering Alpha conference Tuesday.

The fall in bitcoin has some wondering what other implications the drop could have. Specifically, could it hurt Advanced Micro Devices (AMD) and Nvidia Corporation (NVDA) going forward?

In a note earlier this week, Jefferies analyst Mark Lipacis laid out just how much exposure NVDA stock and AMD stock have to cryptocurrencies. The stocks aren’t directly correlated, but because their graphics products are used to mine cryptocurrencies like ethereum, demand for the products are tied to demand for the currencies. The higher demand for crypto, the higher demand for the tools necessary to mine it. That’s good news for AMD and NVDA.

In the second quarter, Lipacis says about 3% of Advanced Micro Devices’ sales came from cryptocurrencies, while accounting for about 10% of Nvidia’s revenue. There are reasons to believe that risks are limited in the near term, Lipacis says, and that cryptocurrencies are not a fad.

But do price drops like the current one in bitcoin hurt AMD and Nvidia? The algorithms may say yes. AMD stock is down about 1% near the open Wednesday, while NVDA stock is down about 75 basis points. Both are underperforming the PowerShares Nasdaq ETF (QQQ) .

Even large near-term price fluctuations in bitcoin are unlikely to cause demand to drop significantly though, which should pad AMD and Nvidia’s cryptocurrency business. However, should demand taper off significantly in the future, it would have a negative impact on these two stocks.

More of What’s Trending on TheStreet:

Jefferies says cryptocurrency mining market is strong for Nvidia and AMD

Jen-Hsun Huang, president and chief executive officer of Nvidia Corp., holds the Nvidia Xavier high-end computing module as he speaks during a keynote presentation at the 2017 Consumer Electronics Show in Las Vegas, Jan. 4, 2017.

David Paul Morris | Bloomberg | Getty Images

Jen-Hsun Huang, president and chief executive officer of Nvidia Corp., holds the Nvidia Xavier high-end computing module as he speaks during a keynote presentation at the 2017 Consumer Electronics Show in Las Vegas, Jan. 4, 2017.

Nvidia and AMD are the best-performing stocks over the past year. One Wall Street firm predicts the strong returns will likely continue.

Jefferies is bullish that cryptocurrency mining will boost demand for the chipmakers’ products even after some on Wall Street have expressed concerns over the companies’ digital currency exposure.

“We think that the risk of a ‘crypto-driven’ inventory correction driving material downside is low in the near term,” Jefferies semiconductor analyst Mark Lipacis wrote in a note to clients Monday, adding demand for graphics processors used in cryptocurrency mining were likely to “remain healthy in 3Q.”

Nvidia’s stock is up nearly 180 percent in the past 12 months through midday Monday compared with the S&P 500’s 17 percent gain. That performance ranks No. 1 in the entire S&P 500, according to FactSet. AMD shares are up 112 percent in the same time period, the No. 2 gain in the benchmark index.

Lipacis reiterated his buy ratings for both chipmakers. He also reaffirmed his $180 and $19 price targets for Nvidia and AMD, respectively.

Cryptocurrency miners use graphics cards from AMD and Nvidia to “mine” new coins, which can then be sold or held for future appreciation.

The analyst cited the price strength of bitcoin since July. The digital currency rose nearly 120 percent from its low in mid-July and is up almost 340 percent year to date through midday Monday, according to data from industry website CoinDesk.

Lipacis noted even if digital currency prices drop in the future, the effect on the chipmakers will be more muted than it was in previous cycles.

“Both AMD and NVDA have introduced ‘cryptospecific GPU SKUs’ that have a low risk of competing with core gaming GPUs in secondary markets,” he wrote. “So should cryptocurrency prices dramatically decline again, we think that AMD’s risk of competing with its own GPUs resold by miners in secondary markets is lower than the 2013-15 cycle.”

The analyst also predicts cryptocurrency mining demand will be a viable growth market longer term for Nvidia and AMD:

“We actually believe that the technology they are based on, called Blockchain, which supports secure accounting of distributed ledgers, has applications in financial services beyond cryptocurrencies. We expect demand for Blockchain GPUs (including for cryptocurrencies) to continue to grow and become an important driver for GPU growth, even if with some degree of volatility.”

AMD Narrowing The Gap With Nvidia: Time To Buy – Advanced Micro Devices, Inc. (NASDAQ:AMD)

AMD (AMD) has joined hands with Baidu (BIDU) for optimizing software for AMD’s Radeon Instinct GPUs in Baidu’s datacenters. As a result, AMD’s open ROCm 1.6 software platform will better compete against Nvidia’s (NVDA) CUDA GPU computing software platform.

AMD is leaving no stones unturned to become a strong player at the datacenter level. This article delves deeper into AMD’s recent initiative and estimates its probable impact on AMD’s stock price.

Image Source: Wikimedia Commons

AMD’s Software Optimizing Initiative

ROCm, the acronym of Radeon Open Compute Platform, has been made to become as popular as Nvidia’s proprietary CUDA (compute unified device architecture) toolset in the HPC (high-performance computing) environment. This is essential for AMD to grab Nvidia’s datacenter market share. AMD’s new Radeon Instinct MI25, MI8, and MI6 accelerators needed an advanced heterogeneous processing approach. The open ROCm platform, coupled with MIOpen framework libraries, will help developers rely less on OpenCL, the industry-standard heterogeneous processing platform led by the HSA Foundation.

Image Source: GitHub

Although OpenCL is an efficient platform for mobile and desktop PCs, for HPC workloads, such as deep learning, inference and training, OpenCL is far less robust compared to Nvidia’s CUDA. Now that AMD has developed ROCm, the company needs to popularize it by spreading the platform across the globe. Via partnering with Baidu, AMD will be able to achieve this goal.

Why Baidu?

Baidu is equivalent to Google (GOOGL)(GOOG) in China. Baidu offers (1) search services in China and internationally, (2) transaction services like mobile games, wallet, maps etc., and (3) iQiyi, an online video platform that shows licensed movies, television series, etc. These activities has made Baidu a real hyperscale player. The Chinese search giant recently released its conversation-based AI (artificial intelligence) platform DuerOS. In addition, the company released its Apollo autonomous driving platform, which Baidu’s COO Qi Lu called the “Android of the autonomous driving industry, but more open and powerful.”

Baidu has partnered with Nvidia to use the latter’s Volta GPUs in its AI ventures, including Baidu Cloud and Apollo autonomous driving. Baidu is specially interested in deploying Nvidia’s HGX architecture with Tesla V100 and Tesla P4 GPU accelerators for AI training and inference in its datacenters. Amid this scenario, it makes perfect business sense for AMD to collaborate with Baidu to popularize and optimize its ROCm platform.

Beating CUDA Isn’t Easy

Although beating CUDA isn’t an easy task, AMD can certainly narrow the gap it currently has in competition with Nvidia. Despite the fact that Nvidia is a stronger opponent, and CEO Jensen Huang spent huge money to develop CUDA, the recent rise of AMD proves that even Nvidia isn’t invincible. According to The New York Times:

“The cost to the company was incredible,” said Mr. Huang, 54, who estimated that Nvidia had spent $500 million a year on the effort, known broadly as CUDA (for compute unified device architecture), when the company’s total revenue was around $3 billion. Nvidia puts its total spending on turning GPUs into more general-purpose computing tools at nearly $10 billion since CUDA was introduced.

The point is AMD can’t out-compete Nvidia’s ecosystem just yet, but can certainly throw competition toward Nvidia, albeit gradually. Why has Baidu agreed to collaborate with AMD, despite its ongoing partnership with Nvidia? Because it believes AMD’s hardware and software products have potential to compete with those of Nvidia.

Investors’ Angle

In my last article on AMD I opined it would be difficult for AMD’s MI series GPUs to out-compete Nvidia’s Tesla V100 just yet because ROCm needs time to mature. The recent development that AMD is partnering with Baidu to optimize its ROCm software platform will help ROCm to mature quickly than I previously anticipated.

Baidu is not a small company. If it shows interest in AMD’s datacenter initiative, that should be construed as a positive development from investors’ point of view.

Meanwhile, the year-end is approaching, and investors should now focus on AMD’s 2018 financial performance. AMD’s annual sales growth is expanding at a CAGR of approximately 4% since the last five quarters. I believe in the next five quarters its sales growth will rise at a CAGR of around 5-6% due to new product launches and software platform maturity. For CY-2018, I expect its yearly sales would reach approximately $6 billion or $6 per share. At a maximum P/S multiple of 3x, I expect the stock to reach $18 sometime in the next 12 to 15 months.

Conclusion

As I explained in a previous article, AMD’s indebtedness is the toughest enemy for its stock. Offering a P/S multiple of more than 3x isn’t possible for me, since AMD’s high debt-load will prevent it from being profitable in the foreseeable future. Despite that, the stock has significant upside left. I believe for long-term investors it’s the right time to buy the stock.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Nvidia GTX 1080 vs. AMD RX Vega … micro machines edition

Gigabyte GTX 1080 Mini

We’ve got ourselves a small-off, people! Get ready for the ultimate in mini graphics cards head-to-heads as Gigabyte have taken the wraps off their new GTX 1080 Mini. It’s an overclocked GTX 1080 with a footprint that makes Zotac’s wee effort look positively obese, and AMD’s RX Vega Nano seem like mere pocket calculator stuff.

Read more: the best graphics card to buy right now.

The Zotac GTX 1080 Mini was the smallest version of Nvidia’s Pascal-based powerhouse that I’d seen in the wild, measuring in at just 211mm in length, but Gigabyte’s own GTX 1080 Mini somehow squeezes high-end GPU cooling into a package that stretches to only 169mm. 

Despite having a single 90mm fan attached to the Gigabyte heatsink, the GTX 1080 Mini still has a factory-overclocked setup. The default ‘Gaming Mode’ gives the GP104 chip its standard 1,607MHz/1,733MHz clockspeed configuration, but the ‘OC Mode’ pushes things on a touch further to 1,632MHz/1,771MHz, for its base and boost clocks respectively.

Gigabyte GTX 1080 Mini comparison

Interestingly this version is only using the original GTX 1080’s 10Gbps memory speeds as opposed to the 11Gbps GDDR5X chips that were introduced alongside the speedy VRAM that came with the GTX 1080 Ti when that launched in March. I guess the wee cooler’s not hardcore enough to be able to deal with both an overclocked GPU and the extra heat generated by overclocked memory.

It might seem a little odd for Gigabyte to be releasing a new version of the GTX 1080 when we’re talking about a GPU that’s over a year old now but, given that we’re not going to see anything Nvidia Volta shaped until 2018 and AMD’s RX Vega is struggling to best it, there’s still a lot of life left in the ol’ Pascal dog.

Tim Sweeney's AMD RX Vega Nano

Creating a super-small version is a smart move, too, given that AMD have been teasing their own micro machine variant of their Vega cards, the Radeon RX Vega Nano. So far, AMD have yet to release the Nano – except, of course, to Tim Sweeney – but when it comes to small-form-factor gaming beasts Gigabyte’s more powerful GPU ought to give the red team’s card some serious problems when it comes to gaming.

Gigabyte haven’t revealed a release date, or price, for their GTX 1080 Mini, but I wouldn’t be the least bit surprised to find it launching at the same time as the AMD RX Vega Nano.