The recent rally in Nvidia’s (NASDAQ:NVDA) and AMD’s (NASDAQ:AMD) stock appears to be losing steam, prompting investors to contemplate whether it’s an opportune moment to buy the dip in these chip giants, especially as demand for semiconductor development in artificial intelligence (AI) continues to surge.

Super AI Chip Competition

Nvidia recently unveiled a new processor design and chip family named Blackwell, boasting the claim of housing the most powerful artificial intelligence transistors on the market. Meanwhile, AMD has been making strides in the development of new accelerators and processors for AI with its MI300 series chips. Notably, AMD’s MI300X chips have been positioned to challenge Nvidia’s H100 series chips in the battle to train large language models like OpenAI’s chat GPT.

However, Nvidia appears to have raised the stakes with its latest H200 and GH200 “super chip,” which was an upgrade to its AI computing platform and held the market leader position even before the introduction of the Blackwell series.

Market Value and Growth Potential

Currently, Nvidia and AMD lead the semiconductor development for AI chips, with Intel following closely behind. The AI chip market is estimated to be worth upwards of $60 billion, with a projected Compound Annual Growth Rate (CAGR) of 30% or higher in the coming years.

Recent Performances and Growth Comparisons

Nvidia’s stock, trading just under $900, has experienced a slight correction from its 52-week highs of $974 a share. Year to date, Nvidia’s stock has surged by 80%. On the other hand, AMD’s stock, priced around $182, has dipped 25% from its 52-week peak of $227.30 a share but is still up 23% year to date.

In terms of growth projections, Nvidia anticipates a 70% increase in total sales in its current fiscal year, with annual earnings forecasted to jump 81%. AMD expects an 11% expansion in revenue this fiscal year, followed by a 22% increase in the next fiscal year.

Deciding Factor

Despite fierce competition, Nvidia maintains an edge in semiconductor development for AI, bolstered by the introduction of the Blackwell series.  

Conclusion

While both Nvidia and AMD present compelling investment opportunities, Nvidia’s continued dominance in AI chip development, along with its strong growth projections and favorable ranking, make it an attractive choice for investors seeking exposure to this sector. However, investors should conduct thorough research and consider their investment objectives before making a decision.

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