Intel stock drops after NVidia’s server chip announcement
New server central processor “Grace” has been announced by Nvidia. The new chip is based on ARM technology. The announcement raised Nvidia market share by almost 3% compared to chip maker Intel. Their share fell by almost 6%. Nvidia is mostly popular for its graphics processor for personal computers amongst many things. When the crypto market started gaining attention last year, there was a shortage of graphics chip all around. Even AMD is falling behind in supply. Things were quite neutral but after the server chip announcement, they shook the ground for Intel. Nvidia works on AI, ML, smart gaming, cloud gaming and various consumer-grade electric products too besides hardware-based products.
Intel holds more than 90% of the chip market. AMD holds a good market share but compared to Intel it's pretty low. AMD gave a nice fight to Nvidia on the graphics chip market but still team green had plans to provide the best and latest technology to their customers. On a post shared by CNBC, during the 2020 business year, Intel managed to raise $26.1 billion from data centre business groups. Which was a great improvement from the previous year and had an 11% margin.
Breaking down from Q2 revenue guidance it was estimated $17.8 billion vs. $17.55 billion in profit. Even the data centre group revenue was $5.6 billion. New Intel CEO Pat Gelsinger gave some strategy on how they want to tackle the situation. Intel will try to compete with Nvidia as much as possible and healthy competition is required to keep the tech market afloat. These phenomena’s help bringing new technology to light and affordable prices for consumers. Though the new chips are server-based, companies and businesses will claim benefit from them.
According to a meeting on CNBC Tv, they mentioned Nvidia as a disruptor. Not only for the GeForce chips used by consumer-grade computers but for bringing competition in the server chip market. This market is solely controlled by the biggest companies in the world and Nvidia is not behind on this list. They came to the market with brute strength that is already making an impact.
Pat said, “Usually when you beat by $1 billion and raise the year by half a billion, I’d expect a little bit better response from the market.” Also “It means we’re getting more competitive and back on our front foot.” With optimistic hope to get back to 60% gross margin, Intel wants 30% of chips to be manufactured on US soil.
Nvidia has green data centres and yields around 17% cash flow around EPS stability. For team green, it is great news. As more investors and shareholders are interested in green stock rather than blue in the chip market. According to the CEO of Marketrebellion, Pete Najarian, “It’s not a matter of how it was just matter of when disrupters like Nvidia come forward with a challenge to chip companies.”
“Grace” chips are not only for server computers but the company is also working with the US government. The U.S. Department of Energy with the help of Los Alamos National Laboratory is working together to use “Grace” CPU chips to build supercomputers. We know supercomputers are powerful enough to execute complex algorithms and they generally belong to top tier companies. They are not available for general people and this research may bring the possibility to have more raw power that can be invested in elsewhere. In earlier news, there was talk on an ongoing deal. Nvidia acquires ARM deal, but the deal didn’t go through yet. And it was the biggest move from the company in this decade. They are always making decisions that can directly impact the world of tech. And we guess it’s the same reason the company is a success in every shot they encountered.
If anyone in the chip market can challenge Intel, experts suggest it will be Nvidia only. Intel crop has been seeing drastic share fluctuation and it's not common for them. Chances are a new ruling and a management committee will be set for working on the matter. They will need market dominance back to have more percentage like before and continuous trust from old investors.