AI server market: cloud giants to command 60% demand in 2024

The Nvidia vs AMD debate

The Trendforce report also highlighted an increasing move towards proprietary ASIC development by cloud giants such as Google, AWS, Microsoft, and Meta, driven by scalability and cost efficiency. Additionally, AMD is intensifying competition by offering products at 60%–70% of the cost of similar Nvidia models, adopting a more cost-effective strategy.

“This allows AMD to penetrate the market more aggressively, especially with flagship clients,” the report said. “Microsoft is expected to be the most enthusiastic adopter of AMD’s high-end GPU MI300 solutions in 2024.”

During a recent investor conference, tech giants Meta, OpenAI, and Microsoft announced their plans to adopt AMD’s latest AI chip, the Instinct MI300X, according to a report by CNBC. This move is indicative of a broader industry trend where technology firms are exploring cost-effective alternatives to Nvidia’s high-priced graphics processors.

“AMD is under tremendous pressure, primarily because of two things at work here,” said Sanchit Vir Gogia, chief analyst and CEO at Greyhound Research. “Firstly, the way Nvidia is sprucing up its product line, and secondly, the way it’s increasing the efficiency in each new product. At the same time, it’s pursuing a very aggressive pricing strategy as well, which is clearly adding a lot of pressure on our competitors.”

Nvidia’s goals amid the persisting concerns

Given the challenges, Nvidia is strategically overhauling its product range to set a robust course for its future.

“Estimating Nvidia’s recent response to competition, it is expected that they will introduce different product lines (such as the H100/H200/B series) and adopt a more aggressive pricing strategy,” said Frank Kung, senior analyst at TrendForce. “In anticipation of fierce competition from main rivals like AMD, who are aiming to capture North American CSPs (Cloud Service Providers) customers and penetrate the CSPs AI market where Nvidia has traditionally held a dominant position, it is predicted that AMD will offer comparable products (e.g., MI300 vs H100) with lower pricing to gain market share.”