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Will AMD's Decline Create an Opportunity for NVIDIA?

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Advanced Micro Devices (NYSE: AMD) expects its revenue to drop by 11 percent. Could this decline be the opportunity NVIDIA (NASDAQ: NVDA) has been seeking?

Over the past decade, NVIDIA has battled AMD for the crown of graphic processing. From game consoles to tablets and other devices, the two companies account for almost 100 percent of the graphics processor unit (GPU) market. Both firms specialize in bringing graphic acceleration to PC users, allowing graphic designers, video editors and other professionals to power their most graphic-intensive programs. Consumers also benefit from AMD and NVIDIA's graphic accelerators, as they enable Macs and PCs to play HD video and high-end video games.

NVIDIA has recently gained a significant edge over AMD by securing multiple deals with Apple (NASDAQ: AAPL). While the company's products do not power any of Apple's current iDevices, the Mac maker proudly touted its use of NVIDIA chips when unveiling the next-gen MacBook Pro. NVIDIA graphics can also be found within the standard (revised) MacBook Pros. However, AMD's chips remain within the aging Mac Pro, as well as the recently upgraded iMac and Mac Mini.

AMD recently lost a major opportunity to excel when Microsoft (NASDAQ: MSFT) announced that it would use NVIDIA's Tegra 3 processor for its upcoming tablet, Surface. As the first major hardware release from Microsoft since Xbox 360 and Zune, (the latter of which flopped), Surface is expected to make waves within the tech industry. The highly anticipated tablet is seen as a potential threat to Apple's domain, as its Windows 8 operating system could allow business users to perform more tasks than the iPad.

Google (NASDAQ: GOOG) dealt another blow to AMD when it announced that it would also use the Tegra 3 for its tablet, the seven-inch Nexus 7. Priced at $199, the Nexus 7 is expected to cut into the small, yet lucrative market for seven-inch tablets. That market is currently dominated by Samsung and Amazon (NASDAQ: AMZN), with Amazon rumored to add NVIDIA processors to its next-gen tablet. Samsung's tablets already include NVIDIA technology.

With AMD's expected decline, investors have been given a glimpse into the future of the processor market. While NVIDIA's shares have been climbing slowly, (albeit, with a few dips in between), AMD has dropped roughly 40 percent in the last three months.

Follow me @LouisBedigianBZ

Posted-In: Amazon AMD Apple Google Kindle Fire MacBook Pro MicrosoftTech Best of Benzinga


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