Nvidia Is Moving Into Intel and Qualcomm's Turf. These Are the Losers Investors Should Watch Closely.
Key Points
Nvidia’s RTX Spark targets high-end Windows PCs.
That expansion could spell trouble for Intel, AMD, and Qualcomm.
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On May 31, Nvidia (NASDAQ: NVDA) introduced RTX Spark, which merges its Blackwell RTX GPU with its Grace CPU into a single "superchip" for Windows PCs. It worked with MediaTek and Microsoft (NASDAQ: MSFT) to develop those new chips, which might pose a major threat to Intel (NASDAQ: INTC), Qualcomm (NASDAQ: QCOM), and other chipmakers in the near future.
Why is Nvidia expanding its CPU business again?
Nvidia generates most of its revenue from discrete GPUs, but it also develops CPUs with Arm's (NASDAQ: ARM) power-efficient chip architecture. Its most visible ARM-based CPU is Tegra, which powers Nintendo's Switch consoles and Microsoft's Surface devices.
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Nvidia's ARM-based Grace and Vera CPUs are built for data centers. Its specialized Orin and Thor system-on-chip (SoC) products (which combine an ARM CPU with an Nvidia GPU) are used in advanced robots, autonomous vehicles, and infotainment systems. With the RTX Spark, Nvidia is expanding its CPU business into Windows PCs -- a market traditionally dominated by Intel and AMD (NASDAQ: AMD). Qualcomm also sells its own ARM-based Snapdragon processors for PCs.
Why is Nvidia's move bad news for those chipmakers?
Intel and AMD still have a near-duopoly in Windows PCs, but they both use the x86 chip architecture -- which is less power-efficient than Arm's mobile-first architecture. Therefore, ARM-powered PCs are a good option for consumers who value battery life over raw processing power.
That's why Qualcomm launched its first Snapdragon chip for Windows PCs in 2018. In 2024, Qualcomm launched its second wave of Snapdragon chips for Windows PCs, which were optimized for locally processing Copilot's generative AI services.
Nvidia's entry into the PC CPU market threatens all three chipmakers. Nvidia's power-efficient Arm chips could pull PC makers away from Intel and AMD. Both x86 chipmakers are launching more "AI-optimized" CPUs to stay relevant as Nvidia's GPUs dominate the headlines, but Nvidia's RTX Spark CPUs could process AI tasks far more efficiently.
Nvidia can also leverage its reputation as the top AI GPU chipmaker to gain ground against Qualcomm, which integrates its own weaker Adreno GPU into its Snapdragon PC processors. Qualcomm's latest Snapdragon PC processors can handle some casual games, but they're not built to handle heavy 3D graphics or AI applications like Nvidia's RTX GPUs. That's bad news for Qualcomm, which is desperately trying to diversify its top line away from smartphones.
What should investors expect to happen?
With a 20-core Arm CPU and Blackwell GPU with up to 128GB of high-speed memory, Nvidia's RTX Spark could threaten Intel and AMD in the high-end Windows PC market and Qualcomm's entire Windows PC business. That disruption won't happen overnight, but investors in those targeted chipmakers need to carefully track Nvidia's next moves.
Should you buy stock in Nvidia right now?
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, Microsoft, Nintendo, Nvidia, and Qualcomm. The Motley Fool has a disclosure policy.
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