Unstoppable Chip Stocks: How Long Can the Frenzy Last?

The surge in artificial intelligence has ignited a wave of excitement across the tech industry, with the upstream semiconductor sector gaining fervent attention. In 2024, global chip stocks have continued their meteoric ascent, rightfully earning the adulation of Wall Street and powerfully bolstering the $Nasdaq Composite Index(.IXIC.US)$ to record-breaking closes.

In the first two months of 2024, $NVIDIA(NVDA.US)$'s shares have been persistently reaching new heights, propelling the company to become the third-largest in terms of market value in the US stock market. $Advanced Micro Devices(AMD.US)$'s stock surged 9% yesterday, pushing its market capitalization past the $300 billion mark. Meanwhile, $Arm Holdings(ARM.US)$'s stock price has increased by 90% over the past two months.

$Arm Holdings(ARM.US)$'s business model centers around technology licensing, boasting a wide application spectrum that encompasses industry giants from $Apple(AAPL.US)$ to $Microsoft(MSFT.US)$ and $Amazon(AMZN.US)$. This positions ARM as a pivotal player across the entire tech sector. In their latest earnings call, the company underscored the synergistic potential between their technology and GPUs. CEO Rene Haas highlighted NVIDIA's Grace Hopper 200 chip during an analyst call, pointing out the seamless integration of NVIDIA's H100 chip with CPUs based on ARM's Neoverse architecture.

$NVIDIA(NVDA.US)$ is undoubtedly one of the biggest winners in the AI wave, providing robust computational support for large models. NVIDIA dominates the data center GPU market with a significant lead, accounting for 92% of the market share in 2023, according to IOT Analytics. NVIDIA will host its flagship GTC (GPU Technology Conference) 2024 at the San Jose Convention Center from March 18th to 21st. Jensen Huang, the CEO and founder of NVIDIA, will deliver talks on the recent progress in accelerated computing, generative AI, and robotics.

$Advanced Micro Devices(AMD.US)$ is striving to catch up. Last December, AMD unveiled the MI300X GPU designed for large model training and inference, along with the MI300A APU tailored for HPC (High-Performance Computing). Dr. Lisa Su, AMD's CEO, went as far as to state that the Instinct MI300X can "rival NVIDIA's H100 HGX". Furthermore, tech behemoths $Microsoft(MSFT.US)$ and $Meta Platforms(META.US)$ have confirmed that they will be adopting AMD's latest AI chip, the Instinct MI300X, for their operations. Other tech giants, including $Dell Technologies(DELL.US)$, $Hewlett Packard Enterprise(HPE.US)$, and $Oracle(ORCL.US)$, have been testing or running AMD's Instinct GPUs as a cost-effective alternative to Nvidia's chips.