Advanced Micro Devices Inc. Chief Executive Lisa Su used the biggest stage her company has enjoyed in more than a decade to confidently declare Wednesday that it expects to challenge — and perhaps beat — larger and more well-known rivals.
In a main CES keynote that in previous years hosted Intel Corp. INTC, -0.06% and Nvidia Corp. NVDA, +0.73% CEOs, Su detailed AMD’s 2019 plans for computers, servers and videogames. With new, high-end graphics cards and a second-generation server chip, Su particularly went after Nvidia and Intel, showing performance of early versions of its 7-nanometer hardware against those rivals’ offerings.
AMD AMD, -4.11% has long been Plan B for semiconductors and graphics chips, behind Intel and Nvidia, but it has made major strides under Su, including getting back into the server business last year and producing higher-quality processors and graphics chips. It paid off, with the biggest gains for any stock in the S&P 500 index in 2018, and Su sees more return coming this year.
“A couple of years ago, we saw some fundamental bottlenecks to increasing computer performance, and we made some big bets,” Su said early in her speech, “We made some big bets about where we thought the industry was going to go, and 2019 is a key year where we see some of those big bets really pay off.”
Read: Interview with AMD’s Su on change in foundry, its roadmap and new head of client-compute business
Those bets were focused on servers, gaming, high-performance laptops and PCs, and cloud servers. In her speech, she laid out the roadmap for AMD’s efforts in those sectors, with a new high-end gaming card called Radeon 7, new generations of Ryzen chips for laptops and PCs, and Zen processors for servers.
The Radeon VII was the biggest surprise, according to former AMD executive Patrick Moorhead, now principal analyst for Moor Insights and Strategies. He noted that AMD had not targeted the high end of the gaming market for at least five years, but that is exactly where AMD is looking with the $699 graphics card.
Related: Micron’s stock boosts chip rally after upgrade, analysts’ comments at CES
Nvidia has owned the premium gaming card market, and launched its own new gaming cards last year, with a cheaper version announced Sunday night at CES. AMD claimed that Radeon VII — launching Feb.7 — had higher frame rates than the new top-of-the-line Nvidia cards, with a lower price tag.
Nvidia Chief Executive Jensen Huang was not impressed, though, calling the AMD announcement “underwhelming.”
“The performance is lousy and it’s nothing new,” Huang said in a question-and-answer session with select journalists immediately after AMD’s keynote in the same Las Vegas casino complex. He noted that the new Nvidia cards have artificial-intelligence capabilities and real-time ray tracing, unlike AMD’s new cards.
“Weird launch, maybe they thought of it this morning,” he said, before laughing and suggesting he may have gone too far with his last comment.
Most current games do not take advantage of Nvidia’s addition of ray tracing and AI to its cards, however. Moorhead noted that Nvidia has a better play for the future, but AMD — with the lower price tag than the comparable Nvidia GeForce RTX 2080 cards — could offer a better value for the present gaming era.
“Nvidia supports acceleration of ray tracing and they have added some special features that use artificial intelligence to make the image more realistic,” the analyst told MarketWatch. “It will take a while for it to achieve mass acceptance, but many of the bigger titles and publishers have said they will do this in the future.”
For the future, AMD also announced that it has been working with Alphabet Inc.’s GOOGL, -0.85% GOOG, -0.87% Google on its Project Stream approach to cloud gaming — also a way to battle Nvidia, which has its own attempt to create the Netflix of videogames. AMD’s server chips are powering the cloud-gaming demo that launched in October, Su said.
See: Why there may never be a Netflix of videogames
Those server chips may be the biggest financial opportunity for AMD, which began its path back to the server business last year, with Epyc chips arriving in servers. Many analysts expect that 2019 will be the year that proves if the company can establish significant market share in that sector, and Su showed off an early version of its second-generation Epyc chip Wednesday that is expected to launch in the middle of the year.
Intel is the dominant force in selling CPUs for servers, but on stage Su demonstrated an early version of a second-generation Epyc chip beating two Intel chips.
“We believe it is the best server processor the world has ever seen,” Su stated confidently.
Intel declined to comment, noting that it could not verify the results as AMD’s server processor is not shipping yet; Intel announced on Monday at CES that its new Cascade Lake data-center chip is shipping, but AMD used older Xeon processors for the stage test.
To live up to its higher valuation, AMD doesn’t have to actually beat Intel, though, it just needs to compete well enough to grow market share from virtually zero and increase revenue. Su noted that AMD has already won server business from major cloud-computing companies including Amazon.com Inc. AMZN, -0.72% , Microsoft Corp. MSFT, -1.27% , Baidu BIDU, -0.27% and Tencent 0700, +0.43% , which shows that it is on its way to doing just that.
Read: Why AMD believes it can challenge Intel in servers
AMD also demonstrated third-generation Ryzen PC chips against Intel’s new i9 chips, with its demo showing stronger performance yet again. Intel did not immediately respond to a request for comment.
No tech company is going to willingly run a public demo where it doesn’t win, but AMD’s willingness to throw a gauntlet down in aiming for the chip thrones held by Intel and Nvidia shows that it is confident that it will not fall apart as it has in previous attempts. Su has managed to push AMD back into competition with larger rivals, and Wednesday’s appearance on the biggest stage tech has to offer shows that she is confident AMD can do much more.
AMD stock fell 4.2% in afternoon trading Thursday, enough to pace the PHLX Semiconductor Index’s decliners. The stock began selling off in Wednesday’s after-hours session after Su began to speak. Nvidia gained 0.3% while Intel slipped 0.3%.
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