Nvidia Stock Shaken On Report Tesla Is Developing Chips With AMD

Elon Musk

Tesla and Advanced Micro Devices Inc. are reportedly working together to develop an AI chip for self-driving cars.

Tesla isn't completely going it alone in chip development, according to the source, and will build on top of AMD intellectual property, CNBC reported.

Chip architect Jim Keller, formerly of AMD and Apple, and who designed the Apple A4 and A5 iPhone chips, is spearheading the project for Tesla, CNBC said, adding that several other AMD veterans also have been brought on board to work on the project. AMD and Tesla both declined to comment on the story.

Now there is speculation that Tesla will not be relying on Nvidia anymore as the electric vehicle manufacturer is aiming to move its chip development in-house.

According to new information acquired by CNBC, Tesla is trying to become more independent when it comes to autopilot enabling AI processing. Tesla is viewed as a leader in all things autonomous and any architectural move from the company is not done willy-nilly.




AMD shares closed up 62 cents, or nearly 5%, at $13.74, following CNBC's headline, and are up another 87 cents, over 6%, at $14.62, in late trading.

How should NVIDIA Corporation (NASDAQ:NVDA) investors be taking the AMD/Tesla news, considering Tesla has had history with Nvidia first? Tesla CEO Elon Musk promised to make that capability available to consumers in 2019. This could be something that helps AMD better compete against NVIDIA in the GPU space, with the helping hands (or should I say bank accounts and deals on semi custom designs) of Tesla?

In similar fashion, another analyst said the Tesla news is a validation of AMD's technology. Nvidia fell on the news and is down 2.03% on Thursday.

"From a volume perspective, Tesla represents less than 1% of the global autos market, and we think the potential to segment the market may be a possible alternative to another sole-source supplier transition", Lipacis said.

The US house repeated a "buy" on AMD and $19 price target for the stock.

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