Intel and AMD drop after Nvidia unveils plans to sell new CPU processors

Nvidia CEO Jensen Huang
  • Nvidia on Monday unveiled plans to create and sell its own CPU processors, making it a direct competitor with Intel and AMD.
  • Nvidia has historically focused on manufacturing GPU processors, also known as video cards.
  • Shares of Nvidia jumped as much as 4% after the news, while Intel and AMD both fell about 4%.
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Nvidia announced plans to manufacture its own CPU processor, transforming the company into a direct competitor of both Intel and AMD.

The news sent shares of Nvidia surging by as much as 4% on Tuesday, while both Intel and AMD fell by about 4%. Nvidia has historically manufactured premium GPU processors, also known as video cards, with its target customer being PC gamers.

But now, Nvidia is expanding its reach with an Arm-based data center CPU named Grace that delivers a big performance leap for systems that are training AI models, according to the announcement. Nvidia acquired Arm Holdings last year for $40 billion, though the deal has not yet closed.

“The result of more than 10,000 engineering years of work, the NVIDIA Grace CPU is designed to address the computing requirements for the world’s most advanced applications, including natural language processing, recommender systems and AI supercomputing,” Nvidia said.

Intel is the world’s largest maker of data center CPUs, but increased competition has spurred the company to make big multi-billion dollar investments into its manufacturing capabilities.

Grace is expected to be launched in 2023 and will be used in the build of new supercomputers from Swiss Supercomputing Center and the US Department of Energy’s Las Alamos National Laboratory.

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Nvidia slips as concerns over global chip shortage weigh on 4th-quarter earnings beat

NVIDIA computer graphic cards
  • Shares of Nvidia fell on Thursday as investor concerns about a global chip shortage weighed on an otherwise positive earnings report.
  • The stock fell 3% in premarket trades on Thursday.
  • The semiconductor industry has been struggling to meet global demand, thanks to an unexpected boom in online activity brought about by the pandemic.
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Shares of chip maker Nvidia fell 3% in premarket trading on on Thursday as investors’ concerns over the global chip shortage weighed on fiscal fourth-quarter earnings that beat expectations.

Nvidia CEO Jensen Huang during the Wednesday earnings call said he expects the shortage to continue this 2021. But Huang assured investors that the shortage would not affect some segments. 

The semiconductor industry in the past year has been struggling to meet global demand, thanks to an unexpected boom in online activity brought about by the pandemic. Nvidia, which outsources from Asia, Taiwan Semiconductor Manufacturing and Samsung Electronics, in particular, is stuck in the middle. Both Asian companies are having difficulty keeping pace with demand, and the bottleneck has trickled down to Nvidia. 

Nvidia sells semiconductor parts for gaming, artificial intelligence, data centers, and automobiles, among other sectors.

The company reported that revenue jumped 61% to $5 billion for the quarter ending January 31 and adjusted earnings of $3.10 per share, both considerably higher than Wall Street’s $4.82 billion and $2.81 per share estimates.

For the current fiscal first quarter, the chip maker set a forecast of $5.3 billion in revenue versus analysts’ expectations of $4.49 billion. 

For the coming year, the Santa Clara, California-based company remains bullish. Nvidia announced that it is working on graphic cards for mining cryptocurrencies like ethereum, even if the CEO said it will not be a huge part of its business.

Last year, Nvidia announced plans to buy Arm, Softbank’s chip division, for $40 billion. Arm is not a chip maker, but licenses chip designs, widely used in mobile phones, to customers such as Apple, Samsung, and Intel.

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