ETFs
Chip ETFs Focus on Next-Gen AI Product Launches – June 6, 2024
Major chipmakers have been racing to introduce next-generation artificial intelligence (AI) chips. There have been announcements of Intel (INTC – Free report) , Advanced microsystems (AMD – Free report) And Nvidia (NVDA – Free report) . Intel announced new Xeon 6 processors on Tuesday at the Computex technology conference in Taiwan.
Before that, Advanced microsystems presented its latest AI processors at the Computex technology fair in Taipei. CEO Lisa Su introduced the MI325X accelerator, which is scheduled for release in the fourth quarter of 2024. The move is part of AMD’s strategic plan to challenge the industry leader. Nvidia in the competitive AI semiconductor market.
Growing demand for AI chips
The rise of generative AI programs has created high demand for advanced chips used in AI data centers. California-based AMD is working to compete with Nvidia, which currently dominates about 80% of the AI semiconductor market.
Intel is trying to catch up with NVIDIA and AMD, after being largely unnoticed in the AI frenzy. Tech giants like Meta, Microsoft, Tesla, and Google are mostly buying as many NVIDIA chips as possible.
Following NVIDIA’s lead, Intel said its Xeon 6 processor will deliver better performance and power efficiency for high-intensity data center workloads compared to its predecessor, CEO Pat Gelsinger said during the Computex technology conference in Taiwan: as quoted on CNBC.
Meanwhile, AMD introduced the MI350 series, expected in 2025, promising a 35x improvement in inference performance over the current MI300 series. Additionally, the MI400 series, based on a new architecture called “Next”, is expected to be launched in 2026.
Meanwhile, NVIDIA also revealed its next generation of AI chips – Rubin – which features eight HBM4 memory stacks. The platform, available in 2026, includes new GPUs for AI training and deployment, as well as a central processor named “Vera”.
The Rubin AI platform will use HBM4 memory, with Rubin Ultra including 12 HBM4 stacks. In particular, NVIDIA’s accelerated computing technology enables significant cost and energy savings. Investors should note that AMD plans to release new AI chips every year. NVIDIA is also committed to releasing new models of AI chips every year.
Investor interest and market performance
Investors are closely watching AMD and NVIDIA for long-term updates on AI chip developments. AMD shares have more than doubled since the start of 2023, although this growth is modest compared to NVIDIA’s seven-fold increase over the same period. AMD projects AI chip sales of around $4 billion for 2024, an increase of $500 million from previous estimates.
Hit Trio with these ETFs
Investors can access both chipmakers through a single investment. This includes ETFs like Strive US Semiconductor ETF (SHOCK – Free report) , AXS Esoterica NextG Economy ETF (WUGI – Free report) , Invesco PHLX Semiconductor ETF (SOXQ – Free report) And TrueShares Technology, AI & Deep Learning ETF (LRNZ – Free report) .
AMD has approximately 7.23% exposure to SHOC, 6.57% to WUGI, 6.31% to SOXQ, and 6.11% to LRNZ. In contrast, NVDA has approximately 31% exposure to SHOC and WUGI, 15.27% to SOXQ and 16.57% to LRNZ. Meanwhile, Intel is focused at 4.16% on iShares Semiconductor ETF (SOXX – Free report) and 5.2% exposure to NASDAQ First Trust Semiconductor ETF (FTXL – Free report) .
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