When the cryptocurrency of 2018 hit the digital currency mining industry, shares of chipmakers Nvidia and AMD showed wildly different prices.
Nvidia lost 32% last year, but AMD gained 71%. And that's no surprise to Christopher Rolland, an analyst at Susquehanna International Group.
“Some of the differences between the two companies are because NVIDIA is a pure GPU player, while AMD, while it has GPUs, also sells a lot of CPUs,” Rolland told Markets Insider.
Simply put, a graphics processing unit (GPU) can only do a fraction of the many functions that a central processing unit (CPU) can do, but it does so at incredible speed. Therefore, GPUs are more cost-effective for mining cryptocurrencies, but CPUs have a wider consumer base.
According to Rolland, the cryptocurrency boom in 2017 led both Nvidia and AMD to overproduce GPUs for mining digital currencies, causing a problem when digital currencies took a big plunge in 2018.
For AMD, thanks to its investment in CPUs, the market looks more promising. “Their business outlook relative to Intel is the best it has been in decades,” he said.
Last year, AMD shares rose more than 230% through mid-September as rival Intel struggled with production delays for its 10-nanometer chips. And while a research report later said Intel may have fixed its production problem sooner than expected, analysts noted that the delay “opened the door for AMD to gain share in both servers and PCs.”.
You also speculate that AMD is expected to widely deploy 7nm chips in the first quarter of 2019, which theoretically provide better performance than 10nm ones. “There is hope that it will gain market share from Intel,” Rolland added.
Another reason for the two companies' different performance could be the timing of their financial reporting. Typically, Nvidia reports a month later than AMD, which means Nvidia has disclosed more information about its stock.
“Nvidia has already reported its full inventory amount,” Rolland said. “AMD has only reported half.”
