The artificial intelligence (AI) market has continued gaining traction in 2024 as companies spend huge amounts of money on building up infrastructure so that they don’t fall behind in the race to deploy and integrate AI applications.
According to one estimate, global spending on AI is expected to cross a whopping $200 billion this year, and chipmakers such as Nvidia (NASDAQ: NVDA) have allowed investors to get rich from this massive splurge. Looking ahead, the market for semiconductors powering AI applications is expected to deliver a whopping $341 billion in annual revenue in 2033. The latest developments in the AI chip market signal that Nvidia continues to remain the best bet for investors to capitalize on this tremendous opportunity.
AMD’s and Intel’s earnings reports make it clear that they are far behind Nvidia
Nvidia enjoyed an early start in the AI chip market. Its A100 processors were used for training ChatGPT, the chatbot that kicked off the AI revolution toward the end of 2022. The company’s AI GPUs (graphics processing units) gained immense popularity and its H100 processor became a runaway success.
Rivals such as Advanced Micro Devices and Intel were left to play catch up as they didn’t have a chip powerful enough to compete with Nvidia’s H100. Both companies were behind Nvidia by at least a year on the AI chip development curve. This is evident from the fact that AMD’s rival to Nvidia’s H100, the MI300X accelerator, was launched in December 2023. Meanwhile, Intel’s H100 opponent, the Gaudi 3, was announced last month and will start shipping later this year.
Nvidia’s H100 went into full production in September 2022. This lead has allowed Nvidia to exercise a solid grip over the AI chip market and also explains why its competitors’ latest offerings aren’t gaining much traction. For instance, AMD sees its AI GPU sales hitting at least $4 billion in 2024. Intel is further behind and expects the Gaudi 3 launch to help it generate $500 million in AI chip sales in the second half of 2024.
Nvidia is leagues ahead of both Intel and AMD considering that it…
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