Advanced Micro Devices (NASDAQ:AMD) has been a thorn in the side for Nvidia (NASDAQ:NVDA) over the past couple of years as it has made massive inroads into the latter's bread-and-butter discrete GPU (graphics processing units) business. However, the latest GPU market share numbers indicate that the tables are turning in Nvidia's favor once again, as gamers and performance-focused PC users are flocking to its products because of their superior performance.

Nvidia stamps its authority in GPUs

According to Jon Peddie Research, Nvidia's discrete GPU market share increased to 72.8% during the third quarter of 2017, with AMD commanding the rest. By comparison, Nvidia held 69.7% of this space during the second quarter and 70.2% in the year-ago period, so a 29.5% jump in shipments last quarter has boosted the company's dominance in this space.

By comparison, AMD's shipments increased just 7.6% on a quarter-to-quarter basis, which indicates that the momentum has swung in Nvidia's favor.

Nvidia's GPU shipment growth was superior to Intel's (NASDAQ:INTC) 5% jump. PC shipments increased 10.3% quarter over quarter indicating that Intel was unable to monopolize all of this growth.

PC manufacturers are increasingly deploying Nvidia chips in their offerings in place of Intel's integrated graphics. This has allowed the graphics specialist to increase its total graphics chip market share from 16% last year to 19.3% this year.

All in all, Nvidia is firing on all cylinders in the GPU market as consumers and PC OEMs (original equipment manufacturers) prefer its discrete graphics cards over Intel's integrated chips and AMD's latest Vega GPUs. This isn't surprising as high-end hardware accounts for 43% of the PC gaming market, and this is where Nvidia excels thanks to its technology lead over rivals.

What about the competition?

AMD is Nvidia's only competition in the discrete GPU market, and it was expected to give the latter a run for its money with the recently released Vega line-up. However, it turned out that AMD's Vega graphics cards were not good enough to go up against Nvidia's GeForce cards. In fact, the RX Vega 64 and RX Vega 56 can barely match the performance of the GTX 1080 and GTX 1070 GPUs that Nvidia had launched more than a year ago.

NVIDIA GTX 1080 graphics card.

Image Source: NVIDIA 

The new AMD cards aren't too cheap either and they consume more power. Consumers, therefore, opted to pay a little more and get the more powerful GPU from Nvidia. The limited availability of AMD's latest graphics cards also meant that they were selling at a premium, further shrinking the gap between AMD and Nvidia.

Nvidia has stepped up its pricing game with the GTX 1070 Ti graphics card, which is priced at $450 for the basic edition. This is slightly higher than the $400 suggested retail price for AMD's RX Vega 56, but performance-oriented users won't mind shelling the extra money.

This product helps Nvidia tighten its grip over the GPU market as it now has a product that sits right between its flagship and mid-range offerings. However, Intel could come up with a discrete GPU of its own to challenge Nvidia's supremacy.

Chipzilla recently recruited former AMD GPU head Raja Koduri with the intention of expanding its "leading position in integrated graphics for the PC market with high-end discrete graphics solutions for a broad range of computing segments." Therefore, Intel has made it clear that it is going to attack the discrete GPU segment where it currently doesn't have a presence.

Intel hasn't given any specific roadmap about its discrete GPU development just yet as Koduri will be joining the company only in December. Its entry into this space will certainly intensify the competition. But the possibility of a newcomer such as Intel knocking a seasoned player like Nvidia off its perch seems far-fetched given the latter's vice-like grip over the discrete GPU market.

In all, Nvidia looks set to enjoy a strong run in discrete GPUs thanks to the absence of competition, which bodes well for investors.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.