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When two heavyweights square off, it's time to step back and let the chips fall where they may.
The heavyweights in this case are tech titans Advanced Micro Devices (AMD) and Nvidia (NVDA) , and the chips in question are semiconductors that are capable of meeting the ever-increasing demands of artificial intelligence.
This is indeed a fight for the future.
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AI is driving chip-market surge
A Deloitte study issued in November said that the market for specialized chips optimized for generative AI will exceed $50 billion in 2024.
From close to zero in 2022, that sum is expected to make up two-thirds of all AI-chip sales in the year, the firm said.
Deloitte also predicted that total AI-chip sales this year will be 11% of the predicted global chip market of $576 billion.
Recent AI chip market forecasts for 2027 range from an aggressive $400 billion to a more conservative $110 billion, the firm said.
Related: Key analyst reveals new S&P 500 price target as AI powers record rally
Deloitte noted that "the major chip companies as well as others have built or are building chips that are specially optimized for generative AI, as older AI chips are too slow or too inefficient to do it well and are lacking the right kind of design and memory."
General-purpose chips like central processing units can also be used for some simpler AI tasks, but CPUs are becoming less and less useful as AI advances.
Investors are listening for chip advances
Wall Street is getting the message loud and clear.
The S&P 500, which is already on pace for one of its best first-quarter rallies in decades, has a lot more left in its tank over the coming year, analysts are forecasting, as the AI-led investment rally continues to drive gains.
Advanced Micro Devices and Nvidia are key players in this rally.
Nvidia, currently the leading provider of chips specially designed to train and run AI applications, has seen its shares skyrocket recently.
On Feb. 22, the company saw a stock surge that added more than $277 billion to the AI-chip maker's market value — the single-largest market gain in U.S. history — and helped power the S&P 500 to an all-time high of 5,087.03 points.
Nvidia reported adjusted fourth-quarter earnings of $5.16 a share, a nearly sixfold increase from the year-earlier period, as revenue more than tripled to $21.1 billion. The company had a market cap of $2.134 trillion — with a T — at last check.
Meanwhile, AMD on Jan. 30 reported fourth-quarter earnings of 77 cents a share, an 11.5% increase from the year-earlier period and matching Wall Street’s forecasts.