AMD CEO Lisa Su makes the opening speech at COMPUTEX forum in Taipei, Taiwan, on June 3, 2024.
Ann Wang | Reuters
AMD said on Wednesday that it will lay off 4% of its global staff as the longtime computer chipmaker seeks to gain a stronger foothold in the growing artificial intelligence chip space dominated by Nvidia.
“As a part of aligning our resources with our largest growth opportunities, we are taking a number of targeted steps that will unfortunately result in reducing our global workforce by approximately 4%,” an AMD representative said in a statement. “We are committed to treating impacted employees with respect and helping them through this transition.”
AMD had 26,000 employees at the end of last year, according to a U.S. Securities and Exchange Commission filing.
AMD is the second-biggest producer of graphics processing units, or GPUs, behind Nvidia. The company has said AI represents one of its largest growth opportunities. AMD stock is down 5% in 2024 while Nvidia shares are up 200%, making it the most valuable publicly traded company in the world.
AMD produces powerful AI accelerators for data centers, including the MI300X, which companies such as Meta and Microsoft purchase as an alternative to Nvidia-based systems. But Nvidia dominates the market for powerful AI chips, with over 80% market share, partially because it developed the core software that AI engineers use to develop programs such as OpenAI’s ChatGPT.
AMD said in October it expects $5 billion in AI chip sales this year, about a fifth of the $25.7 billion in total sales FactSet projects for AMD’s 2024. AMD believes the total market for AI chips will be $500 billion by 2028, but its total sales are currently dwarfed by Nvidia, which FactSet expects to post $125.9 billion in revenue for calendar year 2024.
GPUs were originally developed for gaming, which is lagging at AMD. AMD’s gaming segment is expected to decline 59% in 2024 to $2.57 billion in revenue, according to FactSet.
AMD also makes processor chips for laptops, desktops and servers, competing primarily with Intel. Its share of server CPU sales rose nearly 3% on an annual basis in the third quarter to 34%, according to Mercury Research.
POLAND – 2024/11/13: In this photo illustration, the NVIDIA company logo is seen displayed on a smartphone screen. (Photo Illustration by Piotr Swat/SOPA Images/LightRocket via Getty Images)
Sopa Images | Lightrocket | Getty Images
Nvidia shares dropped in U.S. premarket trading Thursday after the tech giant’s third-quarter earnings failed to impress investors.
Shares of the chipmaker slumped 3.21% at around 5:03 a.m. ET, following the Wednesday release of Nvidia’s quarterly results, which beat on both the top and bottom lines.
Revenue came in at $35.08 billion, up 94% year-on-year and exceeding the $33.16 billion forecast by LSEG analysts. Earnings per share was 81 cents adjusted, also above analyst expectations.
Other chipmakers fell on the back of the market reaction to Nvidia’s third-quarter results. Shares of Intel, Qualcomm and Micron Technology all lost 1% or more in value, while AMD declined 0.6%.
The slump in Nvidia also had a knock-on effect on European semiconductor firms. ASML, a key chip equipment supplier, dropped 0.9%, while compatriot Dutch chip firm ASMI fell 0.5%. Chipmakers BE Semiconductor, STMicroelectronics and Infineon slipped 0.8%, 0.7 and 0.6%, respectively.
Several notable chip names were also in negative territory in Asia. TSMC, which makes Nvidia’s high-performance graphics processing units, eased as much as 1.5%. Contract electronics manufacturer Foxconn dropped 1.9%.
Why are Nvidia shares falling?
Nvidia has largely cornered the market for the high-powered chips powering the world’s most advanced artificial intelligence models, such as OpenAI’s ChatGPT.
Despite nearly doubling sales year-on-year, Nvidia’s third-quarter results showed a slowdown from previous quarters. Nvidia previously reported growth of 122% in the second quarter, 262% in the first quarter, and 265% in the fourth quarter of 2023.
Derren Nathan, head of equity research at Hargreaves Lansdown, said in emailed comments Wednesday that the dip in Nvidia’s share price “suggests even outstanding isn’t enough for some investors,” adding that he expects the stock to bounce back once markets open.
“NVIDIA’s generated stellar gains for shareholders over many years now, and right now it’s pretty hard to see any major holes in the investment case,” Nathan added.
Analysts are looking ahead to the much-anticipated launch of Nvidia’s next-generation chip called Blackwell. On the firm’s earnings call, CEO Jensen Huang said that demand for the chip is exceeding supply.
Ofcom said it received evidence showing Microsoft makes it less attractive for customers to run its Office productivity apps on cloud infrastructure other than Microsoft Azure.
Igor Golovniov | Sopa Images | Lightrocket via Getty Images
LONDON — Britain’s competition regulator is preparing remedies aimed at solving competition issues in the multibillion-pound cloud computing industry.
The Competition and Markets Authority is set to unveil its provisional decision detailing “behavioral” remedies addressing anti-competitive practices in the sector following a months-long investigation into the market, two sources familiar with the matter told CNBC.
The sources, who preferred to remain anonymous given the investigation’s sensitive nature, said that the cloud market remedies could be announced within the next two weeks. The regulator previously set itself a deadline of November to December 2024 to publish its provisional decision.
A CMA spokesperson declined to comment on the timing of its provisional decision when asked by CNBC.
Cloud infrastructure services is a market that’s dominated by U.S. technology giants Amazon and Microsoft. Amazon is the largest player in the market, offering cloud services via its Amazon Web Services (AWS) arm. Microsoft is the second-largest provider, selling cloud products under its Microsoft Azure unit.
The CMA probe traces its history back to 2022, when U.K. telecoms regulator Ofcom kicked off a market study examining the dominance of cloud giants Amazon, Microsoft and Google. Ofcom subsequently referred its cloud review to the CMA to address competition issues in the market.
Why is the CMA concerned?
Among the key issues the CMA is expected to address with recommended behavioral remedies, are so-called “egress” fees charging companies for transferring data from one cloud to another, licensing fees viewed as unfair, volume discounts, and interoperability issues that make it harder to switch vendor.
According to one of the sources, there’s a chance Google may be excluded from the scope of the competition remedies given it is smaller in size compared to market leaders AWS and Microsoft Azure.
Amazon and Microsoft declined to comment on this story when contacted by CNBC. Google did not immediately return a request for comment.
What could the remedies look like?
The CMA has said previously in June that it was more minded toward considering behavioral remedies to resolve its concerns as opposed to “structural” remedies, such as ordering divestments or operational separations.
The watchdog said in a working paper in June that it was “at an early stage” of considering potential remedies.
Solutions floated at the time included imposing price controls restricting the level of egress fees, lowering technical barriers to switching cloud providers, and banning agreements encouraging firms to commit more spend in return for discounts.
One contentious measure the regulator said it was considering was requiring Microsoft to apply the same pricing for its productivity software products regardless of which cloud they’re hosted on — a move that would have a significant impact on Microsoft’s pricing structures.
CMA Chief Executive Sarah Cardell is set to hold a speech on Thursday at Chatham House, a U.K. policy institute. In an interview with the Financial Times, she defended the regulator’s track record on competition enforcement amid criticisms from Prime Minister Keir Starmer that the agency was holding back growth.
She is expected to outline plans for a review in 2025 into whether the CMA should more frequently use behavioral remedies when approving deals, the FT reported.
Bitcoin breached the $95,000 level for the first time Wednesday evening as investors continued pricing in a second Donald Trump presidency.
The price of the flagship cryptocurrency was last higher by more than 3% at $97,646.68, according to Coin Metrics. Earlier, it rose as high as $97,788.00.
Bitcoin has been regularly hitting fresh records this month on hopes that Trump will usher in a golden age of crypto, which would include more supportive regulation for the industry and a potential national strategic bitcoin reserve or stockpile.
It is widely expected to reach $100,000 this year and double by the end of 2025.
“Bitcoin’s price continues to be driven by a number of factors including improved liquidity conditions, increased institutional adoption, and a regulatory environment that has flipped from a headwind to a tailwind,” said Sam Callahan, an analyst at Swan Bitcoin.
Another Trump term also implies larger budget deficits, potentially more inflation and changes to the international role of the dollar – all things that would have a positive impact on the price of bitcoin.
Bitcoin has gained more than 127% in 2024.
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