Unveiling the latest generation of high-end graphics cards should’ve been a knockout punch for Advanced Micro Devices, Inc. (NASDAQ:AMD) in its long competitive struggle with Nvidia Corporation (NASDAQ:NVDA). Instead, AMD stock fell 5.1% on the late-July debut of its Radeon Vega processors while NVDA powered up another 1.2%.
If there’s any finishing blow here, it’s starting to look self-inflicted.
Part of the challenge is that while AMD’s new Radeon Vega processors — to go on sale starting Aug. 4 — are slick, the specifications make me think that they’re going to line up against Nvidia’s flagship GTX 1080: the gold standard in gaming, digital currency “mining” and other high-performance applications.
In the long view, that’s not a bad thing. To remain a relevant link in the tech food chain, and keep AMD stock holders excited, Advanced Micro Devices needs products that turn heads and expand horizons.
On at least a few metrics, Radeon Vega qualifies. But it isn’t clear that these are the metrics that high-performance computer buyers want.
While the fastest Vega in this wave can apparently hit 13.7 trillion floating point operations per second at peak single precision and 27.5 TFLOPS at peak half-precision — more than enough to play games in extreme resolution and stream the video to your friends, for example — it’s actually not groundbreaking stuff. The previous iteration of Vega clocked 13 TFLOPS, and GTX 1080 still ran the killer apps faster.
Bumping up the speed another 3% may be enough to push AMD over the top, but it’s unlikely to make a revolutionary impact on what these machines can visibly do.
That’s not a good thing. Nvidia already owns this segment, which means it’s going to take more than an incremental upgrade to shift user perception and ultimately market share. If performance is comparable, Advanced Micro can carve out a presence here on price, power usage or other competitive factors that the first Vega system failed to capture.
However, it’s not going to be easy or quick, and it may not be cheap either.
Besides, matching Nvidia’s existing technology really only broadens the playing field, when what Wall Street craves is a true disruptive leap ahead of everything else out there. Rumor has it that the new generation of NVDA processors will come out early next year (if not sooner), and if they’re significantly better than the GTX 1080, we may see AMD once again struggle to keep up. In that scenario, a hard-won status quo may only last six to nine months before the tides shift again.
Advanced Micro Devices has plenty of amazing technology to play with. For high-end graphics processing, Vega isn’t changing the game the way investors want. Until we see a home run here, NVDA is going to keep running the bases. AMD stock could struggle.
Hilary Kramer is the editor of GameChangers, Breakout Stocks, High Octane Trader, Absolute Capital Return and Value Authority. She is an accomplished investment specialist and market strategist with more than 25 years of experience in portfolio management, equity research, trading, and risk management. She has extensive expertise in global financial management, asset allocation, investment banking and private equity ventures, and is regularly sought after to provide her analysis on Bloomberg, CNBC, Fox Business Network and other media.
