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Did AMD Just Hand NVIDIA a Huge Opportunity?

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In the rush to cover last week's turmoil at Advanced Micro Devices (NYSE: AMD  ) , industry watchers never fully answered the question of how NVIDIA (Nasdaq: NVDA  ) might benefit from the fallout. It's time to fill the void.

But first, let's review. AMD's board ousted CEO Dirk Meyer for failing to deliver a winning mobile strategy, allowing Intel (Nasdaq: INTC  ) and ARM Holdings (Nasdaq: ARMH  ) to dominate the form factor. NVIDIA, and more recently MIPS Technologies (Nasdaq: MIPS  ) have also made gains. Everyone, it seems, except for AMD.

So Meyer's out. What's this mean for NVIDIA? Two things, I think:

  1. Project Denver gets breathing space. By booting Meyer, AMD's board is essentially committing the company to pour resources into a mobile strategy that has at least a 50-50 chance of failure. With fewer resources available to fight for desktop and laptop share, AMD could have a harder time defending against NVIDIA when its "Project Denver" yields an ARM-powered CPU chip worthy of becoming an Intel and AMD alternative in Windows machines.
  1. A need to move fast to secure tablet share. At CES, NVIDIA showed a number of design wins for its Tegra chips in Android tablets. But this is also a nascent market, and if AMD moves quickly with Fusion chips or another low-powered alternative, there's room to capture tablets not yet powered by ARM-NVIDIA or Intel's Atom. Only a healthy diet of regular, tablet-sized upgrades to Tegra can keep this from happening.

Of course, that's just my take. Now it's your turn to weigh in. Will Project Denver reshape the PC industry? Will AMD win in the mobile marketplace? Please vote in the poll below and then leave a comment to explain your thinking.

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Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has purchased Intel calls and owns shares. The Fool is also on Twitter as @TheMotleyFool. Like Phil Collins, its disclosure policy can feel it coming in the air tonight. Just so you know.

Read/Post Comments (15) | Recommend This Article (7)

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  • Report this Comment On January 18, 2011, at 3:41 PM, kahakun wrote:

    I believe that AMD has proven to be quite resilient in their own market share. They have their own pace and it's respected. There a lot of companies which are attracted to AMD because of their business model and relationships. For a company it's size, it has a mass amount of resources and on top it has an incredible management and smart investment motive. I believe that their APU chips will have an impact on the market just at the levels where AMD can see more than a fair share of success. As for people leaving in and out the company, if anyone know business models are MODELS, especially in the tech industry. That means that Apple will be OK with out Steve Jobs at this point and so will AMD, because both companies have enough resources and accreditation to their name to be trusted and bought! Not to long a go about 6 month there was the same argument here about NVIDIA and how it was going to die and their products where no where with the TEGRA, etc. I bet against all that and made over 100% ROI. My research and ideas are based of fundamental futures, which NEVER LOOSE!!!

  • Report this Comment On January 18, 2011, at 5:43 PM, TEBuddy wrote:

    This is some real speculative kiddy talk. Project Denver is going to fail regardless what AMD does. Nvidia is not going to discover something that others have not been able to do. Try making a processor that can handle the workload of todays users. The X86 is not used by coincidence, it handles workloads with its instruction sets and hardware. AMD started as a X86 clone and redefined the industry.

    Windows on ARM processors, sounds familiar, oh yeah, because it already exists, I use Windows Mobile 6.x a lot on ARM processors. Its nothing new. And now there is Windows Phone 7, or Windows mobile 7 renames windows phone 7 that runs on ARM processors.

    Everyone thinks Nvidia is some kind of innovative company, but they have historically used acquisitions to beat their competition and find real innovation, but then just killing that company and not utilizing it best. The created this Tegra thing which is nothing new or even breathtaking, its just another System on a chip, like everyone else makes, using ARM's intelectual property and probably services from other companies to actually lay it out, like Cadence. Even I have done this, its pretty easy. They may have come up with a piece of their own IP, the graphics part, but the rest was designed and brought to a foundry for you to pick from a menu.

    Nvidia is way way way overpriced, or should I say way way way way way overpriced and will soon drop in half, sell while you can.

  • Report this Comment On January 18, 2011, at 7:05 PM, GeforceTesla wrote:

    @ TEBuddy

    How much AMD has been paying u for posts?

    I ve juz read all ur previous posts and profile.

    ALL OF THEM ARE AMD=>good INTC/NVDA=>BAD related.

    thinking u as a official AMD PR/fanboys(lol) i say u does a really good job.

  • Report this Comment On January 18, 2011, at 8:20 PM, GeforceTesla wrote:

    @ TEBuddy

    1."Windows on ARM processors, sounds familiar, oh yeah....."

    The reason that this is a shocking news is because it is not just a OS on phone that runs on ARM processor. Its is a DESKTOP OS that could run on ARM processor. MSFT have never happened done this before. the desktop CPU market is facing a revolution since this means that all ARM CPU manufactures could get into this market as long as they have a plan. As AMD relies heavily on this market, I say AMD will be facing great competition not only from NVDA but also other strong ones and it wont sound good for AMD if it lacks extensions to other market.

    2."Project Denver is going to ..."

    I have no idea how you can prove this, or even how do you get such conclusion. Its not out yet and you say it will fail? funny. You seems to hate innnovations a lot huh? I dont see much productive commets in this line.

    3."The created this Tegra thing which is nothing new"

    So far according to benchmarks. Tegra 2 could be the top ARM processor due to its outstanding performance.

    4."like everyone else makes, using ARM's intelectual property and probably services from other companies"

    Many company does that. Including AMD which also have to get x86 license and other instruction sets license from intel. AMD also needs Globalfoundary's service to produce their chips. Just like NVIDIA using TSMC to produce their chips. I dont see much point in your line quoted above.

    5. "Even I have done this, its pretty easy. "

    As a Electrical Engineer of texas instruments. I doubt that. (LOL) I think you are just trying to release your "anger"(the dark side?) towards something here.

    6."should I say way way way way way overpr...i"

    I dont see why. As they are doing really well in extending their market with their Tesla and Tegra product line while still holding solid with Quadro and Geforce product line.

  • Report this Comment On January 18, 2011, at 10:33 PM, TEBuddy wrote:

    As an electrical engineer at TI, you should know better, and maybe you should know how to design an ASIC perhaps. If you are even an electrical engineer.

    I do like AMD, I bet I could find tons of fools that do nothing but say how great Intel and Nvidia are without actually knowing the industry or technology. Look at your user name for crying out loud, think youre a Nvidia fanboy perhaps. Intel is a crooked company, I used to own many shares of it, but don't think its going to grow much, especially considering how many facilities they have shut down and people they laid off. Intel paid off AMD, and got away pretty easy too, with all the proof that Intel was being anti-competitive and bullying OEMs.

    The Denver project may "work", but how well and when? If they are competing against Celeron and Sempron maybe. Is this version of windows being developed to take advantage of parellel processing? Some processors could barely run Vista itself. How much faith do we have in Microsoft to have something snappy?

    If Nvidia was so good they could design their own processors, why rely on ARM for their processor IP? What about Nvidia inspires everyone to believe that the effort will even be fruitful? All the foundry tapeouts and silicon will get expensive testing it. They can be thankful at least ARM designs fairly reliable and high yield IP. Do you think all of Intel's projects are successful or AMDs? No, of course not, but they don't always go blabbing about them. AMD has been blabbing about Fusion for 5 years and its finally here. Intel kind of snuch Sandy Bridge CPU/GPU in there to remain relevant.

  • Report this Comment On January 18, 2011, at 10:46 PM, TEBuddy wrote:

    OMG, GeforceTesla created an account just to comment on this thread, to defend Nvidia, or perhaps its the author in disguise. AMD is also one of my stock picks on my profile, so is XOM, so you might see a lot of XOM comments too.

    I'm just saying this is all hype with no legs to run yet. When in the technology business you cannot put much faith in the next big thing.

  • Report this Comment On January 19, 2011, at 12:00 AM, GeforceTesla wrote:

    @ TEBuddy

    U finally responded

    now we have lots of things to discuss here

    1."I do like AMD, I bet I could find t.....ti-competitive and bullying OEMs."

    dont have much to say here.

    2."The Denver project may "work", but how well and when? "

    Upon my previous response. You can see my point

    Its not out yet so conclusions are to early. I didnt say it will success of something like that. What I just said is you have reached your conclusion too early. It seems more likely to be a careless made personal opinion without further observation. so I am not responding to your "performance" guessing since it is too early.

    3."How much faith do we have in Microsoft to have something snappy? "

    Honestly, I do not put too much hope in this in short term. But I do feel it is interesting. As I have said NVDA "is doing really well in extending market with their Tesla and Tegra product line while still holding solid with Quadro and Geforce product line. " As the main business is not interrupted. What is so bad giving a try?

    4."If Nvidia was so good they could design their own processors, why rely on ARM for their processor IP?"

    So whenever they uses other companies IP, the product is Not designed by them? I m not sure if I get your point right but if thats really what you think, then I guess upon your standard, theres only a few company "designs" processors then. And your dearest AMD is not included via your own standards.

    5." What about Nvidia inspires everyone to believe that the effort will even be fruitful? "

    See my response No.2

    6."They can be thankful at least ARM designs fairly reliable and high yield IP"

    Designs high yield IP?? I guess you should really reconstruct your sentences. what do you mean by """high yield IP"""""?

    7."o you think all of Intel's projects are successful or AMDs? No, of course not, but they don't always go blabbing about them."

    Still, see No.2.

    8"AMD has been blabbing about Fusion for 5 years and its finally here. Intel kind of snuch Sandy Bridge CPU/GPU in there to remain relevant. "

    Interesting guessing. AMD is just the first one announcing the CPU/GPU hybrid. You sure intel just snuch it out? sounds like another personal opinion to me.

    9."Is this version of windows being developed to take advantage of parellel processing?"

    You have already been taking advantages of parallel prosessing benefits. It is a new idea and is getting more "involved". But sure, a dramatic change in short term is impossible.

    10.Since you said you develops ARM processors and its "really easy". It makes me curious of your background. and by the way. "we"(not just me) develops ARM processors and in my opinion "we" designs them even there are others IP involved.

  • Report this Comment On January 19, 2011, at 12:08 AM, GeforceTesla wrote:

    just to add one thing. So you wont make a "mis-response" on this one.

    I dont think ARM processor will be matched up against x86 processors in terms of performance in shour term. But still, why so upset about it? Conclusion is still too early and no doubt it is getting more interesting

  • Report this Comment On January 19, 2011, at 4:11 AM, TEBuddy wrote:

    The HYPE is bad, and I am only the opposite of all these articles. Why do you not quelch the enthusiasm as you try to stomp on the skepticism. My conclusions are early but apparantly investors have already concluded it will be a huge hit.

    You came out with the fact that I must be getting paid by AMD, so I can only conclude that Nvidia must be paying TI to help develop thier processors, and so youre getting paid to defend them.

    NVDA is trading at what 60 times its earnings. ABSURD! Even if the project goes somewhere, that market will get crowded fast with all these companies that already build SoC's with ARM.

    NVDA marketing and analysts have always been misleading.

  • Report this Comment On January 19, 2011, at 7:58 AM, GeforceTesla wrote:


    Just one thing. I too believe NVDA is currently overpriced. But its definitely not your "cut in half". $17~18 should be a reasonable price.

    "Why do you not quelch the enthusiasm as you try to stomp on the skepticism'

    Because I dont see damage done in their main businesses. What is wrong with just giving a try in other areas?

    As you did not draw out new productive points in your last post. I dont seem to know how to respond.

  • Report this Comment On January 19, 2011, at 8:00 AM, GeforceTesla wrote:

    By the way.

    Even if all their new plans fail.

    I believe it can still keep its original price whenever their current business is not greatly affected.

    They can at least keep a price of $13-14 if that happpens

  • Report this Comment On January 19, 2011, at 10:30 AM, snowfreeze wrote:

    What the hell is project denver? This is the first that I've heard of it. NVidia cannot even compete properly in the graphics hardware market right now. :( (They used to be great).

    What makes anyone think they can take on the big dogs all of a sudden?

    AMD has great ideas and concepts that work for a cost the average consumer can afford. That makes them the best in my book.

  • Report this Comment On January 19, 2011, at 11:50 AM, Motley1369 wrote:

    @kahakun: I find it hard to try and take analysis advice from those who don't understand the difference between "where" and "were", "loose" and "lose", "mass" and "massive", "to" and "too", "ago" and "a go", the correct usage of plural "s", and possessive "'s".

    @tebuddy: Similarly, learn the difference between "its" and "it's". "youre" isn't a word, and you also seem to have some serious confusion between plural and possessive "s". A quick refresher course on sentence structure would do wonders as well. It is difficult to read your meaning when you run phrases together, miss periods to end sentences, and misuse commas.

    Besides showing your lack of the English language, I would strongly disagree with many of your arguments. X86 is used for compatibility, the instruction set is fairly complex to decode, and it really would be better and more computationally efficient to use a different (simpler) instruction set. Not that this has any real bearing on the discussion.

    Tegra 2 *IS* new. There is currently nothing like it on the market, which gives nvidia a huge advantage. Not one that can't be overcome, but only if there is a compelling reason to do so, if other compatibility issues arise. Also, nvidia doesn't need to focus on making everything themselves. They focus on what they need to do when they need to do it, not try and solve every single problem (or design) themselves. Devoting resources and money reinventing the wheel to gain an insignificant advantage is money wasted.

    And Vista typically didn't have problems running on then current processors at all. The biggest issue it has was that 3rd party drivers for the OS were late, and buggy. Many things had changed under the covers, and the 3rd party driver writers couldn't deliver quality releases on time. Secondly, Vista was designed to take advantage of large amounts of memory, and wasn't optimized to run well in low memory computers. That's where Windows 7 shines. It took all of Vistas advances, optimized it's memory footprint, and reduced resource usage. Thinking that Microsoft couldn't deliver a Windows 7 that runs well in the phone environment would be an extreme folly if that is what they are aiming to do. I don't recall Microsoft often, if ever, failing to deliver a compelling product for a particular niche, if that is what they going for.

    @snowfreeze: AMD makes great products, but so does NVidia. AMD can't compete at the extreme high end with NVidia. They simply do not have a chip that can compete at this time. AMD has the fastest single board, and NVidia has the fastest single chip. Build a 4-way SLI, and you can only use 2 of AMD's fastest boards (4 chips), while NVidia can use 4 580's. The competition isn't even close. As for fastest board, that isn't as big of a deal as it was 2-3 years ago. The enthusiasts that would be in the market for such a high priced video card likely already have a SLI/Crossfire-capable motherboard, and can drop a second card (or third) in when they decide they want to.

    That said, I have owned NVDA stock in the very recent past, and currently hold AMD and INTC stock. I believe AMD stock is currently undervalued, and the markets that AMD and INTC are going to expand enough there is significant room for growth for both, especially as they start focusing on the mobile markets.

  • Report this Comment On January 19, 2011, at 2:36 PM, rav55 wrote:

    Last week AMD was at the top of their game. Then the Board of Directors pulled a stupid stunt and caused the stock to drop 25%.

    The mobile market is massive. But, it's all cheap chips with low margins. The Tablet market is also massive or potentially so, and those chips can be more capable. But nobody has really determined just yet what a Tablet will be used for. Is it just an internet appliance with good graphics or is it a number cruncher?

    Laptop, Desktop and Servers are in AMD's wheelhouse and they have begun a product cycle with Fusion that could be disruptive to the x86-64 market.

    As far as being competitive with Intel? There is every expectation that tey will be. As far as giving Nvidia an advantage? That can happen only if the morons on the AMD Board diverts company resources to building cheap, tiny little chips that nobody really cares about because they aren't RISC. Are there websites devoted to the testing and benchmarking of ARM cpu's? Does anybody really care how fast the CPU is in their mobile phone?

    What AMD did with Zacate and Bobcat was create a performance ceiling with a small, energy sipping, DX11 graphics capapable x86 APU. As this design matures it will get smaller and faster. Just as ARM and Tegra gets bigger and faster. ARM and Tegra have no place to evolve as they are several generations from even approaching the performance of Zacate and Bobcat. Except one: real estate.

    Don't forget that ARM and Tegra (which is ARM in a new dress) are 32 bit cpu's and they are 2 years from 64 bit. AMD is releasing Bulldozer later this year which will be 128 bit. Extreme number crunching! How long before Bobcat 2nd gen is 128 bit? ARM is a little VW bug engine. AMD designs and build's Hemi's.

  • Report this Comment On January 19, 2011, at 2:39 PM, jargonific wrote:

    The market doesn't tolerate down turns well, even for a company that made a lot of people money. NVDA has been on the short list for so long that people are operating from force of habit, and force of will. Notice that the BEST performing area right now is the hedge funds. They should be regulated... or even banned IMHO. The US market would have a chance without all those 'safety' nets for the people who move money around the globe.

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