This Chip Stock Will Beat Nvidia in the Second Half of the Year

There is no doubt that Nvidia (NASDAQ: NVDA) has been the standard-bearer of the AI ​​boom so far. Even after the recent pullback, the stock is still up more than 600% since the start of 2023, adding trillions of dollars in market value along the way.

However, past performance is no guarantee of future returns, and the AI ​​rally is starting to broaden as investors look for alternatives to Nvidia, which may struggle to return to its peak this year. chip stock it looks like it has a good chance of outperforming Nvidia over the rest of the year. Advanced Micro Devices (NASDAQ: AMD)the fabless chipmaker best known for its PC processors, which is now growing rapidly thanks to data center GPUs.

Let’s take a look at some reasons why AMD may beat Nvidia in the second half of the year.

1. Its main rival is in difficulty

AMD’s main competitor in the PC or client market is Intel (NASDAQ:INTC)the chipmaker that has dominated the PC processor market since its inception and still holds a majority market share in the segment.

Intel just announced its biggest restructuring in years, with plans to lay off at least 15% of its workforce by the end of 2025 as part of a $10 billion cost-cutting plan. The company also reported disappointing second-quarter results, issued weak guidance and scrapped its dividend. All told, the announcement paints a picture of a company in disarray, despite CEO Pat Gelsinger having three years to turn around the legacy chipmaker.

Intel shares fell on the news, and its pullback appears to open up an opportunity for rival AMD.

The next battleground between the two companies could be the AI ​​PC chip market, and AMD appears to have an advantage there. AMD CEO Lisa Su said reviews of its new AI PC products like the Zen 5 platform have been “very positive” and was optimistic about PC market growth through 2025, calling it “a good revenue growth opportunity for us.”

Intel also expressed optimism about its Lunar Lake AI PC chip, but acknowledged that it could hurt margins due to its outsourced components, meaning it won’t be the game-changer Intel seems to need.

AMD also has much stronger momentum in the client segment right now, with revenue in that segment up 49% in the second quarter to $1.5 billion. Intel, meanwhile, saw just 9% growth in that segment to $7.4 billion.

Expect AMD to continue to gain market share from Intel in this mass market.

2. Data center revenues take off

AMD’s Mi300 data center GPU is now available and is quickly gaining traction. Data center revenue jumped 115% in the second quarter to $2.8 billion, accounting for nearly half of the company’s revenue in the quarter.

The story continues

The Mi300 has surpassed $1 billion in quarterly revenue for the first time and its customer base is expanding as Microsoft became the first cloud infrastructure to open general availability to the Instinct Mi300X. Instinct is AMD’s data center platform, and AMD said major server makers such as Dell…