Inside Microprocessors and Graphics: INTC, AMD, NVDA, and QCOM
Microprocessors and graphics
Overall semiconductor market growth has slowed due to a slowdown in MPUs (microprocessor), which are largely built on x86 or ARM architecture. The x86-based MPUs are high-performance, power hungry processors used in servers and PCs (personal computers), which ARM-based processors are low-power processors that have a lower performance than x86.
Intel (INTC) leads in the x86 market, and Qualcomm (QCOM) leads in the ARM market, but the rise of GPU (graphics processing units) computing is reducing the need for server MPUs. This shift in trends has impacted stock prices.
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Qualcomm’s and Intel’s stocks reached all-time highs in 1999 and 2000. Intel’s stock fell 64% 12 months after reaching an all-time high of $73.94 in September 2001. Since then, the stock has not crossed $40.0. The stock’s growth came largely from the server processor market.
Qualcomm’s stock grew above $80 in 2014—near its 2000 level of $88—after launching its Snapdragon 810 mobile processor.
In 2016, Nvidia (NVDA) and Advanced Micro Devices (AMD) launched their next-generation 14 nm (nanometer) GPUs, the first technology shift in five years. Many cloud companies adopted Nvidia GPUs for their AI (artificial intelligence) tasks.
These two GPU stocks rose in triple digits in 2016. But AMD’s growth slowed to single digits, and Nvidia’s growth slowed to double digits in 2017. Back in 2000, Nvidia was a new company and didn’t benefit much from the semiconductor boom, but the stock reported its all-time high of $174.56 in August 2017.
Nvidia and AMD
Analysts are bullish on Nvidia and believe that the stock will likely grow more. They have set a consensus price target of $180 for the stock because they believe that the stock has not yet priced in its strong growth potential in autonomous vehicles in 2018.
AMD stock already has priced into its price its bullish earnings estimates, but real earnings have been lower than expected, and now analysts are divided between “buy” and “hold” recommendations for AMD, Intel, and Qualcomm.
Notably, MarketsandMarkets expects the MPU and GPU market to grow at a CAGR (compound annual growth rate) of 2.2% between 2017 and 2022. IDC (International Data Corporation) expects the server MPU market to grow at a CAGR of 2.2% between 2015 and 2020.