Nvidia slides after AMD and Tesla announce a partnership for self-driving cars

Nvidia is down 2.81% at $US180.68 a share on Thursday following reports that AMD is partnering with Tesla to develop a new chip for its self-driving cars technology.

AMD spiked higher following the news as it’s a big win for the company, which was looking to take on Nvidia’s dominance in the area. Some Wall Street analysts, however, wasn’t overly impressed with the deal.

“We view the announcement as a near-term concern that should not impact the [self-driving car] story over the next several years,” Mitch Steves, an analyst at RBC wrote in a note to clients.

Steves thinks that Nvidia still holds a strong grip on the market and won’t be losing that position soon. Tesla represents less than 1% of the current auto market, and Nvidia already has partnerships in place with a bunch of other car manufacturers.

Steves also doesn’t think that the AMD-Tesla chip will even replace Nvidia at Tesla. He views the new chip as a move to address specific computing tasks for the vehicle while an Nvidia chip would still handle general purpose computing.

Mark Lipacis, an analyst at Jefferies, thinks the Tesla partnership is a “critical win” for AMD, but that it’s only the first step for the company if it really wants take on Nvidia.

“A partnership between Tesla and AMD would make sense to us, given that former chief AMD MPU architect, Jim Keller (designer of AMD’s current Zen architecture), left AMD to become Tesla’s Head of Autopilot in early 2016,” Lipacis wrote. He continued by saying that he “would not expect shipments of AMD chips to Tesla to have a material impact near term to AMD bottom line.”

Nvidia is up 75.37% so far this year.

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