Chip maker stocks are generally a volatile space, especially with the swiftly swinging trade relations between China and the US. However, seemingly the one constant is that powerhouse tech companies Intel and NVIDIA dominate the high-end computing space, especially when it comes to gaming. However, that too may be slowly changing as AMD (NASDAQ: AMD) gradually gains ground against its longtime rivals.
Intel (NASDAQ: INTC) stock took a deep dive in April, falling from almost $59 a share to around $44 by late May. The decline happened as a result of the company cutting its 2019 revenue guidance by $2.5 billion to $69 billion, representing a decrease of 3.5% YoY (year-over-year). During the first-quarter earnings call, CEO Robert Swan cited reasons such as slow trends in the market as reasons for the cut.
Although Intel processors are found in most servers, Swan explained that data centers were still digesting excess inventory and capacity acquired during 2018. In the meantime, he predicted that data center spending would remain weak during the first half of 2019, especially in China – causing not only its own stock to fall, but also those of rivals NVIDIA (NVDA) and Advanced Micro Devices (AMD), which dropped by 2% and 1.4% respectively at the time.
At the same time, NAND memory pricing remains a challenge due to ongoing trade tensions between the US and China, reflected by Samsung Electronics’ latest profit warning on Friday, which sent the tech company’s stock tumbling, further bringing Intel’s down with it.
While AMD isn’t immune to these ongoing changes, and its stock is still worth significantly less than Intel’s and NVIDIA’s, the chipmaker is making a strong recovery. Especially when compared to Intel, which suffered two massive security vulnerabilities, Meltdown and Spectre, in 2018. In addition to that, AMD Ryzen processors are now regarded as among the best on the market, leading Microsoft to include it in its next generation Xbox console, codenamed Project Scarlett. Sony is also rumored to be considering AMD to power the next PlayStation. Even Intel’s internal management recognizes the growing threat AMD poses, revealed in leaked internal memos.
In the meantime, both Intel and NVIDIA are focusing on diversifying their offerings and are investing resources into self-driving vehicle technology. NVIDIA saw its stock spike by 21% in June after the company announced that it was partnering with Volvo to develop self-driving trucks.
But on the PC gaming front, the NVIDIA is setting itself up for a price war with AMD after announcing its new “Super” line of graphics cards earlier this month. Many see the move as trying to steal the spotlight away from AMD’s upcoming Navi video cards.
However, AMD is hit back by lowering the price for its upcoming RX 5700 graphics cards by $30-50 days ahead of its launch. The RX 5700 rival and sometimes outperform the NVIDIA’s original RTX 2060 and 2070 cards in terms of performance, and given the comparatively high price NVIDIA cards tend to carry, PC gamers could give AMD some serious consideration.