Advanced Micro Devices (AMD) is making a strategic shift in its focus, aiming to capture a larger share of the gaming GPU market. This new strategy emphasizes targeting the mainstream and mid-range segments, rather than directly competing with Nvidia’s top-tier gaming GPUs. AMD’s Senior Vice President and General Manager, Jack Huynh, confirmed this shift during IFA 2024, stating that AMD is aiming for a 40%-50% share of the total addressable market.
This move is driven by Nvidia’s current dominance in the discrete GPU market, holding an impressive 88% market share, leaving AMD with a mere 12%. To challenge this dominance, AMD is focused on building scale, leveraging its strengths in the mainstream and mid-range categories.
While shifting its focus, AMD remains active in other areas, particularly AI, to bolster shareholder value. The company recently hired Keith Strier, formerly responsible for Nvidia’s commercial relationships with foreign governments. This move demonstrates AMD’s commitment to expanding its presence in the AI market. Additionally, AMD’s $4.9 billion acquisition of AI server company ZT Systems, despite the Ryzen 9000 series failing to gain traction, highlights its strategic focus on the AI space.
In the past 12 months, AMD’s stock has risen by 28%, outperforming Nvidia’s 128% growth. Despite strong quarterly results from both Nvidia and Broadcom Inc., the broader semiconductor and AI-linked stock market has experienced a selloff. This decline has impacted ETFs like VanEck Semiconductor ETF (SMH) and iShares Semiconductor ETF (SOXX), which have dropped over 12% in the past five days.
AMD’s stock currently stands at $136.20, up 1.37% on Monday, while Nvidia is up 1.22% at $104.05. AMD’s strategic shift towards the gaming GPU market, coupled with its AI initiatives, could potentially challenge Nvidia’s dominance in the sector. However, the overall market dynamics and the competitive landscape remain to be seen.
