Nvidia (NVDA 5.93%) has long been a giant in the world of graphics processing units (GPUs), or high-powered chips that fuel the simultaneous computations needed for certain applications. In the company's early days, it mainly sold GPUs to the gaming market, but in more recent times, these chips have become the staple of AI -- and turned into a billion-dollar profit engine for Nvidia.
Nvidia also has broadened its reach beyond the GPU, offering a wide range of related products and services. But one particular type of chip hasn't been the specialty of Nvidia over time, and that's the central processing unit (CPU). Intel (INTC 11.28%) and Advanced Micro Devices (AMD 11.01%) lead here, but if Nvidia has its way, this might soon change. Did Nvidia just say checkmate to these CPU giants? Let's find out.
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Intel and AMD
So, first, let's start by talking about the CPU, a chip that's been a bit left behind in the AI story. CPUs are the main processors in any given computer, and Intel is known for developing the x86 architecture, or instruction set that the CPU uses to do its job. Intel is the market leader in CPUs, including the desktop, laptop, and server markets, with a share of about 60% overall. AMD holds nearly 39% of this market.
These chips haven't played a big role in the early days of the AI story because major tasks, such as the training of large language models, required the GPU's great ability to power complex mathematical calculations simultaneously at scale. The CPU handles operations sequentially, so it doesn't offer the kind of fuel needed for AI training.
But a shift is taking place today as these trained AI systems are now being sent out, in the form of AI agents, to handle real-world problems. In agentic AI, these platforms use reasoning and take action, even multiple actions, on behalf of humans. And CPUs are perfect for this job of managing and carrying out tasks.
NASDAQ: NVDA
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Nvidia's focus on CPUs
Nvidia clearly saw this transition coming as, for the first time ever, the company has put a focus on CPUs and is even launching a stand-alone CPU as part of its upcoming Vera Rubin update. (The complete platform also offers GPUs and many other features to supercharge AI projects at this stage of the AI boom.)
And, wisely, Nvidia designed the Vera CPU specifically to suit the needs of AI agents. The company said the Vera processor offers 1.8x faster task completion than x86 processors.
Meanwhile, Nvidia also is taking on CPU leaders in the personal computing market. Nvidia, in partnership with Microsoft, says the two are reinventing the PC. This is thanks to the chip designer's RTX Spark, a superchip packed with several Nvidia features, including the Blackwell GPU with a new custom CPU.
Nvidia says Vera Rubin for data centers is set to ship in the third quarter, and the company says the RTX Spark superchip will launch in the fall, released as part of Windows PCs from various providers such as Microsoft and Dell. The company is starting out with premium-priced products but progressively will move into other price points, according to CNBC.
Nvidia's ambitions
This opportunity could be substantial, as the stand-alone CPU market represents about $200 billion. And at this early stage, Nvidia already forecasts it will generate $20 billion in stand-alone CPU revenue this year. The company also isn't shy about its ambitions, saying it's on track "to become the world's leading CPU supplier."
So, now let's return to our question: Did Nvidia just say checkmate to Intel and AMD? Yes... and no. Here's what I mean: Nvidia could very well be on track to leadership in the CPU market, though it may take a while for that to trickle down into all price points. And even over time, Nvidia may simply dominate in the premium market. Today, members of the general public who want to buy a laptop don't necessarily need the power of Nvidia's offering. It's still unclear if Nvidia will eventually create an offering that will work for the cost-conscious consumer.
All of this offers Intel and AMD time to advance new products and potentially hold onto market share. So Nvidia's news doesn't mean disaster for these CPU giants. But investors should keep an eye on how they plan to defend their territory as AI giant Nvidia moves in.
