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Naman Shukla
Naman Shukla
Articles (220) 

Can You Still Buy Advanced Micro Devices and NVIDIA?

Both the stocks have run up considerably, but only 1 has more upside left

Both NVIDIA (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD) have performed brilliantly this year. I had recommended buying both the stocks a few months ago, and both are up considerably since then. Advanced Micro Devices in particular has provided triple-digit returns.

After the recent runup, Advanced Micro Devices has less room to run and lesser safety margin than NVIDIA. Hence, Advanced Micro Devices investors should book partial profits whereas NVIDIA investors should continue holding the stock, primarily because of the company’s diverse revenue stream.

A robust presence

NVIDIA released Drive Px2, an in-car artificial intelligence supercomputer, earlier this year. Drive PX2 accounts for the first supercomputer built for a car. The company detailed that Drive PX2 is designed in such a way it can process 24 trillion deep learning operations per second.

However, the above figure looks like an indecent amount of processing power for a vehicle, but an autonomous car needs a platform of huge cameras, sensors, radars and lidars that feel the same as human awareness. Keeping in mind the existing safety of driverless cars, the company is struggling for extraordinary levels of situational awareness.

The company coupled Drive PX 2 with DriveWorks, the software required to operate Drive PX2, through which a deep neural network (DNN) is formed.

On the other hand, NVIDIA’s GP100 is going to be the company’s greatest Pascal-based part for mixed workloads. However, for specific workloads where double-precision calculations are not performed frequently, NVIDIA’s Tesla (NASDAQ:TSLA) P100 is better than the Tesla M40, as P100 is capable of 10.6 teraflops of single-precision performance.

Moreover, NVIDIA’s new GP102 will be used mainly by hyper-scale consumers, as hyper-scale companies are the quick adopters of deep learning, speeding up their growth in Tesla business.

Competition

NVIDIA has grasped a robust position in the automotive industry, but the company also faces tough competition from rival Mobileye (MBLY). However, NVIDIA presently has 21 major partners comprising Tesla, Audi (XTER:NSU), etc.; Mobileye also has some significant partners.

Furthermore, Mobileye publicized its plans to develop EyeQ5, which, according to the company, will be the most powerful processor to date. The company also detailed that it will be approximately eight times more powerful than its previous version EyeQ4, consuming less than 5W of power.

However, EyeQ5 looks quite interesting, but Mobileye has not shown much innovation compared to NVIDIA. NVIDIA’s DNN will help the company beat Mobileye. The only case where Mobileye beats NVIDIA is user-generated mapping data, but in that case also Mobileye faces tough competition from giants Tesla and Google.

Conclusion

Due to NVIDIA’s presence in several high growth markets like autonomous cars, VR, etc., the stock still has room to run in the long run. As a result, I would suggest investors continue holding it despite the recent rally.

On the contrary, since Advanced Micro Devices has shot up more than 100% since my first buy recommendation, investors should sell half their holdings and book partial profits.

Disclosure: I don't hold a position in any of the stocks mentioned in the article.

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