On March 8th, both NVIDIA and AMD, the AI chip giants benefiting from AGI technology, saw a significant drop in their stock prices at the close. Nevertheless, the stock prices of these two companies have reached new highs.
Especially noteworthy is AMD, as a follower, achieving record growth in IDC (data center) GPU sales in 2023; meanwhile, this &#34;strongest challenger to NVIDIA&#34; AI chip design company has been steadily eroding NVIDIA's market share in desktop graphics processing units (GPUs), with its market share rising from 17% to 19% in the fourth quarter of 2023.
In contrast to NVIDIA, AMD's AI chip technology direction focuses more on inference, such as the MI300 chip. AMD's CTO and Executive Vice President, Mark Papermaster, recently revealed that AMD has received a significant demand for AI custom inference chips, covering a wide range of embedded application scenarios. Key to solving AI chip production capacity, many American AI technology companies have mentioned the critical factor of energy efficiency, a view shared by AMD.
<h2>Promotions erode NVIDIA's desktop GPU market share</h2>
On March 8th, AMD closed at $207.39, a decrease of 1.89%. This decline is the largest since February 23rd.
Since ChatGPT was released on November 30, 2022, this chip design company, known on Wall Street as the &#34;strongest challenger to NVIDIA,&#34; has benefited from AI's insatiable appetite for computing power. From December 1, 2022, to March 8, 2023, AMD's stock price has risen by 167.2%; since the beginning of this year, AMD's stock price has increased by over 40%.
Despite AMD's 2023 financial report released on January 30th showing a decrease in both revenue and net profit, especially the latter, with a staggering 35% year-on-year decline, it seems not to have affected the market's confidence in AMD: from January 31st to March 8th, AMD's stock price still achieved a 20.53% increase.
According to AMD's 2023 fiscal year performance report released on January 30th, among AMD's four major business segments, the gaming division accounted for 22% of revenue, making it the second-largest business segment for AMD. The gaming division includes discrete graphics processing units (GPUs), which are independent graphics cards, the core processors in the PC industry apart from CPUs.
PC graphics cards are mainly divided into discrete graphics cards and integrated graphics cards, with the former having a larger scale and higher technological content.
On March 7th, a report released by Jon Peddie Research showed that the independent graphics card (GPU) market continued to recover in the fourth quarter of 2023, with shipments increasing by 6.8% compared to the third quarter of 2023 and by 32% compared to the fourth quarter of 2022.
Surprisingly, AMD's growth is much higher than NVIDIA's, with its market share currently rising to 19%.
According to the Jon Peddie Research report, among the three major GPU manufacturers, Intel's shipments remain stable, while both NVIDIA and AMD have seen quarterly and annual growth.
Specifically, NVIDIA's shipments increased by 4.7% in the third quarter of 2022 and by 22.3% in the fourth quarter of the same year. While this performance may seem decent, when compared to AMD's quarterly growth of 17% and annual growth of 117%, NVIDIA's performance pales in comparison.
AMD's GPU market growth outpaces NVIDIA's, with its market share in the fourth quarter of 2023 increasing from 17% in the third quarter to 19%. Compared to the fourth quarter of 2022, AMD's market share has also grown by 7 percentage points (12% market share for the quarter). Meanwhile, NVIDIA's GPU shipment market share has dropped to 80%.
Correspondingly, NVIDIA's GPU graphics card shipments in the fourth quarter of 2023 increased by 4.7% and 22.3% MoM and YoY, respectively, but its market share continued to decline: 86% (fourth quarter of 2022), 82% (third quarter of 2023), and 80% (fourth quarter of 2023).
However, AMD's &#34;impressive&#34; performance is not due to technological advancements but rather significant price reductions on its previous graphics cards. Essentially, the 2% market share &#34;snatched&#34; from NVIDIA is actually the result of a price war.
Intel has made efforts, but its market share remains negligible, fluctuating between 1% and 2%.
Looking at the overall changes, the report indicates that in the fourth quarter of 2023, the shipment volume of discrete graphics cards increased from 8.9 million units to 9.5 million units, a 6.8% MoM increase and a staggering 32% YoY growth. This growth rate sets a new record for the highest quarterly discrete graphics card shipments in the past decade.
<h2>How is the performance? Production capacity constrained by energy efficiency</h2>
Independent graphics processors performed well in the fourth quarter of 2023, falling under the gaming business unit.
According to AMD's 2023 financial report released on January 30th, AMD's main business is divided into four major segments: one includes the data center business unit, which comprises server CPUs, data center GPUs, Pensando (hardware), and Sizewise data center products. The second segment includes client business, encompassing desktop and laptop processors and chipsets.
The third segment is the gaming business unit (including independent graphics processors and semi-custom gaming console products), and the fourth segment is the embedded business unit (including AMD and Sizewise embedded products).
The financial report shows that in the fourth quarter of 2023, AMD's data center division generated revenue of $22.82 billion (37% of total revenue/29% for the full year), a 38% YoY increase (7% for the full year), and a 43% MoM increase. AMD attributes this growth to the strong performance of AMD Instinct GPUs and the fourth-generation AMD EPYC CPUs.
The Client Computing department generated a revenue of $14.61 billion (24% of total/21% of the year), with a 62% YoY growth (25% decrease for the year), and a 1% MoM growth, mainly driven by the increased sales of AMD Radeon 7000 series CPUs.
The Gaming department revenue reached $13.68 billion (22% of total/27% of the year), showing a 17% YoY decrease (9% decrease for the year) and a 9% MoM decrease. The decline was due to a drop in semi-custom revenue, partially offset by the growth in AMD Radeon GPU sales. The Embedded Business revenue was $10.57 billion (17% of total/23% of the year), with a 24% YoY decrease (17% increase for the year) and a 15% MoM decrease, mainly due to reduced customer inventory levels.
According to the financial report, in Q4 2023, AMD's revenue was $61.68 billion, a 10% YoY increase and a 6% MoM increase. The gross margin was 47%, a 4-percentage-point YoY increase, and flat MoM. The net profit was $667 million, a 3076% YoY increase and a 123% MoM increase.
However, for the entire fiscal year 2023, AMD's revenue was $22.68 billion, a 4% YoY decrease, with a gross margin of 46%, a 1-percentage-point increase, and a net profit of $854 million, a 35% YoY decrease.
Notably, AMD's Data Center business performed exceptionally well in Q4 of the fiscal year 2023.
Lisa Su, CEO of AMD, stated, &#34;We delivered strong performance in 2023, with record quarterly revenue and profit growth driven by AMD Instinct GPU and EPYC CPU sales, as well as higher AMD Ryzen processor sales, leading to both MoM and YoY revenue and profit growth.&#34;
Financial data revealed that AMD's Data Center business unit achieved its best quarterly performance ever in Q4 2023. Throughout the fiscal year 2023, the net revenue of AMD's Data Center business reached $64.96 billion, a 7% YoY increase, marking its best year for this business unit.
AMD provided performance outlook, expecting a revenue of around $5.4 billion in Q1 2024 (with a fluctuation of $300 million). The Data Center department's revenue is expected to remain stable, with the seasonal decline in server sales offset by strong growth in Data Center GPUs. Sales for the Client Computing, Embedded, and Gaming departments are projected to decline continuously, with a significant double-digit drop expected in semi-custom revenue.
It is worth mentioning that AMD's CTO and Executive Vice President, Mark Papermaster, recently revealed a high demand for AI custom inference chips covering a wide range of embedded applications. Therefore, in response to this trend, AMD will offer more customized computing products to meet this demand.
Mark Papermaster pointed out that power is a key limiting factor in solving chip production capacity. &#34;All major operators of large language models are looking for power sources. For developers like AMD, they should pay more attention to energy efficiency. We will promote energy efficiency improvement in every generation of products we design, which is definitely one of the highest priorities.&#34;

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