Top Investor Suggests NVDA, AMD Have Lost Pricing Power

Stephen Guilfoyle,  the President of Sarge986 LLC, recently stated that he had completely unloaded his holdings of Nvidia (NVDA) and AMD (AMD) a month or two ago, after previously steadily reducing his stakes in the companies.

In addition to losing a great deal of their China business, the firms have "lost pricing power" amid greater competition in the U.S.,  Guilfoyle suggested.

NVDA and AMD are currently "in a tough spot," he said.

The video was posted by TheStreet.

Greater Domestic Competition

The large cloud-infrastructure players are being pressured to buy AI chips from more companies and a number of them, including Apple (AAPL) and Amazon (AMZN), are making their own AI processors,   Guilfoyle said.

Amid these trends, there's "pricing pressure" on "the designers of higher- end AI chips," said Guilfoyle, who previously had only mentioned two U.S.-based AI chip makers in the video: NVDA and AMD.

"I don't think they have the pricing power the way they once did," the investor added.

Largely Cut Off  From the Chinese Market

NVDA and AMD are now not allowed to sell the previous versions of their AI chips in China, and Huawei, a China-based tech firm, is filling the void, Guilfoyle reported.

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Disclosure: None. This article is originally published at Insider Monkey