Please ensure Javascript is enabled for purposes of website accessibility

AMD vs. NVIDIA: Here’s How the GPU War Is Playing Out

By Harsh Chauhan – Sep 19, 2017 at 6:34PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

AMD has gained more share, but NVIDIA could make a comeback.

The battle for GPU (graphics processing unit) supremacy between Advanced Micro Devices (AMD 1.31%) and NVIDIA (NVDA 1.51%) is getting more intense with each passing quarter. AMD entered 2017 on the front foot after clawing back significant market share from NVIDIA last year.

The latest market share numbers from Jon Peddie Research suggest AMD has managed to sustain the momentum so far this year. It controlled 29.4% of the discrete GPU market at the end of the second quarter. This is slightly lower than the year-ago period's 30.8% market share, but up from the 27.5% commanded by AMD at the end of the first quarter.

Clearly, the momentum is in AMD's favor as it has managed to gain almost 2% in market share from NVIDIA from the preceding quarter. But will AMD keep up the momentum for the remainder of the year, or will NVIDIA make a comeback? Let's take a look.

A Radeon GPU with a person using a computer in the background.

Image Source: AMD 

Will the Vega boost AMD's sales?

AMD launched the first wave of its Vega graphics cards in mid-August. It has priced the Radeon RX Vega 64 at $499 and the Radeon RX Vega 56 at $399, which seems sensible as both will go up against NVIDIA's GTX 1080 and GTX 1070 GPUs, respectively. The RX Vega 64 matches the price of the GTX 1080, while the RX Vega 56 undercuts the GTX 1070 by a good $100.

Therefore, AMD is following its tried-and-tested strategy of giving consumers the same performance at a lower price point. But the success of the new Vega graphics cards is far from guaranteed as they have been found to be lacking against NVIDIA's offerings in certain areas.

For instance, AMD's new GPUs consume more power than their NVIDIA rivals leading to higher heat generation and electricity costs. Furthermore, they don't offer significant performance gains over their NVIDIA peers.

Independent tests conducted by AnandTech suggest that the Vega 56 is just 8% faster than the GTX 1070, while the Vega 64 matches its counterpart. The gains aren't substantial when the power ratings of the competing GPUs are taken into account, though AMD can expect to move units of the two cards to consumers who are solely focused on pricing and performance.

It won't be surprising if the cheaper Vega 56 card sees stronger demand, as it can deliver 90% of its costlier sibling's performance at just 80% of the price. 

But the problem is that the GTX 1070 GPU that AMD is looking to target with the Vega 56 is already more than a year old. NVIDIA has refreshed its GPU lineup over the past year with more powerful GPUs such as the GTX 1080 Ti and the Titan Xp, and they could help swing the momentum in NVIDIA's favor for the remainder of the year.

Why NVIDIA can make a comeback

NVIDIA hasn't gained market share this year despite launching its new GPUs in March and April. This could be attributed to consumers' anticipation that the new Vega GPUs could deliver a superior performance, but this hasn't turned out to be the case.

The new Vega cards can compete with the older NVIDIA cards -- the refreshed GTX 1080 Ti is 35% faster than the GTX 1080 that AMD is targeting. The GTX 1080 Ti is listed for $699 on NVIDIA's website, so it is priced identically to the liquid-cooled RX Vega 64. However, AMD's GPU consumes 30% more power than the GTX 1080 Ti, while it doesn't outperform NVIDIA in terms of performance, either, as per independent tests.

Hence, consumers might start tilting toward NVIDIA's latest GPU since it provides more value for money when running costs are factored in. AMD, therefore, seems to have missed an opportunity, as the hyped Vega GPUs can compete with older NVIDIA cards at best. Furthermore, NVIDIA can extend its technological advantage over AMD with the launch of its next-gen Volta architecture.

Supply chain rumors indicate that NVIDIA could start volume production of the new Volta GPUs by the end of the year, so it could launch the same in early 2018.

In all, NVIDIA could carry impressive momentum into 2018 as performance-oriented consumers will probably start buying its graphics cards. This should increase the company's sales for the remainder of the year since high-end systems account for 43% of the PC market, while a new generation of NVIDIA GPUs next year could help it win back more market share from AMD.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Nvidia. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Advanced Micro Devices, Inc. Stock Quote
Advanced Micro Devices, Inc.
$67.17 (1.31%) $0.87
NVIDIA Corporation Stock Quote
NVIDIA Corporation
$124.13 (1.51%) $1.85

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.