I am not a computer guy. While I am incredibly cool, handsome, and humble, computers have never been my thing. My knowledge of technology starts and stops at setting up my Xbox. I say that because I am about to drop some bars and maybe take a preliminary, teensy weensy victory lap on Nvidia.

Four days ago, Advanced Micro Devices (AMD) unveiled its new line of chips. AMD is claiming (bragging) that these chips will match or exceed Nvidia’s chips in terms of power. From The Wall Street Journal, "AMD said systems outfitted with its new chips were as good as Nvidia's top-of-the-line H100-based systems in creating complex AI tools, but were faster at generating responses from large language systems, although the claim couldn't be independently verified.” AMD is claiming that their new chips are as good in some areas and better in others than Nvidia’s current top-of-the-line models.

On this news, Nvidia has seen their stock drop 2% (not much) and AMD has seen their stock rise 15% (large). What that tells me, is that Nvidia investors are not worried about AMD’s new chip, and AMD investors are extremely excited. I lean towards AMD investors being correct to be excited, and Nvidia investors should maybe be a little more pessimistic, and one major decision is giving me that feeling.

Meta, OpenAI, Microsoft, and Oracle, what do those companies have in common? They are all buying AMD’s new chip. They are all buying this new chip because it is so much cheaper, and that tells me that viable alternatives are showing up on Nvidia’s block much sooner than I thought they would. I knew that competitors would show up and try and catch Nvidia quickly, but I did not think it would be in 2023.

On top of AMD’s chips being cheaper, if these tech companies are buying their chips, it would appear that their chips are equal to Nvidia's power when it comes to AI. You can be sure that OpenAI made sure that Nvidia’s chips were up to snuff when it comes to processing power with AI. This is a big deal because, from an Nvidia point of view, it doesn't matter if AMD's chips are cheaper if they suck, but if they are equal to yours in quality then you are now in a battle, and your advantage is gone. Now Nvidia’s chips are more expensive and hold a marginal advantage over AMD’s.

In many scenarios, this would be fine, not awesome, but fine. However, those who have recently bought into Nvidia were betting that Nvidia was a runaway train that couldn’t be slowed down. They were projecting that Nvidia was going to carry this advantage for an extremely long time, making the high price worth it. That assumption has been proven false, and I believe Nvidia is looking at a fight before they are ready for it. Now, that is just an assumption, but it does look that while Nvidia struck the first blow, AMD has delivered an espescially strong counterpunch. Now it is up to Nvidia to come back with an even better chip, but that still wouldn’t be a scenario as good as earlier this year. Nvidia is now in a position where they have to keep coming out with chip after chip, better than their competitors, which is again, not what their investors recently have bought into.

I am projecting a rough next 52 weeks for Nvidia. Not to say this company isn’t excellent. I am hoping their price gets beaten down enough for it to be a bargain, so I can scoop it up, perhaps.