If there’s one stock that shows the potential to benefit from artificial intelligence (AI), this would have to be it Nvidia (NASDAQ:NVDA). The company pioneered the graphics processing unit (GPU), which rendered lifelike images in video games. What makes these chips so effective is parallel processing, which takes computationally intensive tasks and breaks them down into smaller, more manageable chunks. Nvidia was able to adapt this technology to the requirements of AI, making it probably the most successful company in the field of AI chips.
However, as demand for AI has increased, numerous technology experts have been working diligently behind the scenes to develop viable alternatives to Nvidia’s industry-leading processors. There were a number of announcements this week as competitors revealed the fruits of those efforts.
Let’s take a look at three.
1. Intel
Earlier this week, Intel (NASDAQ:INTC) introduced its latest AI chip called Gaudi 3, posing a direct challenge to Nvidia’s GPU dominance. The company claims that Gaudi can train AI models almost twice as fast as Nvidia’s flagship H100 and 50 data center processor % faster for inferences – with already trained AI models. The company also said Gaudi delivered all that performance with 40% better power efficiency than the H100 “at a fraction of the cost,” according to Intel.
It’s important to note that Nvidia recently unveiled the successor to its H100, its Blackwell B200 AI GPU, which will ship later this year. Although Gaudi was not compared to the B200, the company said, “We expect it to be very competitive” against Nvidia’s latest processor and called Gaudi “a strong offering.”
Intel is probably not looking to outperform Nvidia’s latest AI chips, but rather to offer companies a cheaper alternative. It’s also worth noting that there is an ongoing shortage of Nvidia’s H100 and H200 chips, creating a bottleneck in AI adoption. Intel’s latest offering could help reduce the backlog.
2. Metaplatforms
Not to be surpassed, Metaplatforms (NASDAQ:META) announced the Meta Training and Inference Accelerator (MTIA) v2, a custom AI chip running in the company’s data centers. Meta announced that the latest version of its MTIA “more than doubles the compute and storage bandwidth” of its predecessor. Initial results suggest that the new processor performs three times better than the first version.
Meta noted that with its latest chip it is trying to provide “the right balance of computing power, memory bandwidth and storage capacity.” The company does not use these chips for AI processing; at least not yet. Meta uses the processors to improve the speed and efficiency of its ranking and recommendation systems, which display relevant content on its social media pages and display targeted advertising.
Meta is one of Nvidia’s largest customers. So if the company is successful with its AI chip efforts, the company could reduce its reliance on Nvidia’s AI processors.
3. Alphabet
At the Google Cloud Next event this week alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG) announced the availability of Cloud Tensor Processing Unit (TPU) v5p, the latest version of its AI-centric processor. The company said its Cloud TPU can train large language models (LLMs) underlying AI systems three times faster than version 4.
As usual, Google’s TPUs will not be sold, but will be available on Google Cloud later this year.
However, in a blog post, Google noted that the company is expanding its Nvidia GPU capabilities with the A3 Mega supercomputer, which is equipped with Nvidia H100 GPUs. Google Cloud customers also have access to virtual machines (VM) with Nvidia’s Blackwell B200 and Grace Blackwell GB200 GPUs.
Google also introduced Axion, its first data center central processing unit (CPU) developed in collaboration with Arm stocks. According to Google, Axion is 30% faster than the leading CPU, with 50% better performance and 62% higher efficiency than Intel and x86 chips modern micro devices (NASDAQ:AMD).
An important insight for Nvidia investors
While Intel wants to compete directly with Nvidia for a share of the AI chip market, Meta Platforms and Alphabet are developing their own AI chips for specific purposes, either internally or for cloud customers. While Intel claims that its AI-centric chips can compete with Nvidia’s flagship processors, Nvidia has already moved on and will soon ship the next version of its cutting-edge AI processors.
This highlights Nvidia’s enviable position in the industry – its competitors are constantly catching up. They claim to surpass Nvidia in terms of performance, but their bragging rights don’t last long as Nvidia’s next-generation chips are already on the market.
It is also important to point out that the market for generative AI is growing rapidly and the market for these cutting-edge processors is growing. As a result, Nvidia will likely maintain its industry-leading position even as competitors enter the fray.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Danny Vena has positions at Alphabet, Meta Platforms and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Meta Platforms and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2023 calls for $57.50 on Intel, long January 2025 calls for $45 on Intel, and short May 2024 calls for $47 on Intel. The Motley Fool has a disclosure policy.
“3 Artificial Intelligence (AI) Stocks That Will Give Nvidia a Fight” was originally published by The Motley Fool