When the 2018 crypto crash rocked the cryptocurrency-mining industry, shares of the chipmakers Nvidia and AMD performed wildly different.
Nvidia lost 32% last year, but AMD gained a whopping 71%. And that’s no surprise in the eyes of Christopher Rolland, a semiconductor analyst at Susquehanna International Group.
“Some of the differences between the two stocks are simply because Nvidia is a pure GPU player, whereas AMD has GPUs as well, they also sell a lot of CPUs,” Rolland told Markets Insider.
Simply put, a graphics processing unit (GPU) can only do a fraction of the many operations a central processing unit (CPU) does, but it does so with incredible speed. Therefore, GPUs are more cost-effective for crypto mining, but CPUs have a broader consumer base.
According to Rolland, the crypto boom in 2017 led both Nvidia and AMD to overproduce GPUs for crypto mining, causing an inventory problem when digital currencies crashed in 2018.
For AMD, thanks to its CPU business, the market has a lot more hope and optimism. “The prospects for their CPU business versus Intel are the best that have been in decades,” he said.
Last year, AMD shares surged by more than 230% through the middle of September as rival Intel was contending with a production delay for its 10-nanometer chips. And while a research report later said Intel may have cured its production problem sooner than expected, analysts noted that the delay “opened the door for AMD to gain share in both servers and PCs – near and long term.”
Also at stake is that AMD is widely expected to roll out its 7 nm chips in the first quarter of 2019, which in theory provide better performance than 10nm ones. “There’s hope that they are going to gain market share from Intel,” Rolland added.
Another reason for the two stocks’ different performance, Rolland says, could be the timing of their financial reporting. Usually, Nvidia reports a month later than AMD, which means Nvidia has disclosed more information about its inventory issues.
“Nvidia has already confessed fully to the amount of inventory that’s out there,” said Rolland. “AMD has only half confessed.”