NVIDIA is struggling, but so are AMD and INTEL

If you've taken a peek at Nvidia's stock recently (Nasdaq: NVDA) you may have noticed that it is trading at $11.82, down some 33% from a week ago, and down 66% from it's 52 week high. What gives?

Last week Nvidia had a pre-earnings announcement warning that revenues and margins wouldn't meet analysts expectations. Their reason?

"The estimated decrease in revenue and gross margin is due to several reasons: end-market weakness around the world, the delayed ramp of a next generation MCP, and price adjustments of our GPU products to respond to competitive products," the company said in a statement.

MCP stands for Media and Communications Processor. For those that are unfamiliar with the industry, Nvidia is simply referring to a new "platform" for their processors. The big thing here is the "price adjustments of our GPU products." This is because Nvidia has but one competitor, AMD.

Around late last year, when AMD was announcing constant delays to their products, many if not most people counted AMD out of the race for the next generation of chips. But despite all of the drama over people calling for AMD CEO, Hector Ruiz, to resgin, AMD has chugged along and quietly released its next generation mobile cpu + graphics platform--PUMA.

Puma has definitely impressed critics. It is being featured in a brand new laptop from HP called the dv5z. Here is an excerpt from a review of the laptop by NotebookReview.com

In short, AMD and ATI just murdered the low-end dedicated graphics card market. There's absolutely no reason to buy a laptop with a low-end dedicated graphics card like the NVIDIA 8400m GS because the new ATI integrated graphics solution performs just as well (if not better) at a fraction of the cost.

One would imagine that weakness in Nvidia due to competition might mean an uptick in AMD's share price. That isn't the case. AMD although doing well in the graphics department is still lagging Intel in CPU technology. AMD's next generation PUMA actually consumes more battery life than before. This is a huge no-no for laptops, which already don't stay on long enough (mine is about to run out of batteries as we speak!)

Furthermore AMD recently released its top of the line desktop cpu to very little fan fare. The title of the article from Engadget says it all: AMD's flagship Phenom X4 9950 BE announced: Intel laughs, points

As you'd hope from AMD's flagship desktop CPU, the X4 9950 is faster across the board than the previous AMD title holder, the X4 9850, albeit, just 5%

AMD continues to lag Intel in terms of performance per watt as well

Another very logical conclusion is that because of AMD's continued underperformance in the CPU market, Intel might find strength in it's stock. That's also false.

The overall conclusion? Chip makers is not where you want to be right now, as an investor. Competition = lower share prices for all that is involved.

But for consumers, and the rest of the world AMD should serve as a reminder to what competition really means. Cheaper toys for everyone!