NVIDIA Corporation (NASDAQ:NVDA) is weighing a step that would have seemed unthinkable a year ago: shipping its next-generation Rubin Ultra GPU with less memory than originally promised. According to The Information, the company has been testing at least three versions with reduced high-bandwidth memory, some as low as 192GB to 256GB, well below the 1 terabyte Jensen Huang originally announced.
Meanwhile, rival Advanced Micro Devices, Inc. (NASDAQ:AMD) is pushing ahead with its own AI system, Helios, which ships to customers including Microsoft, Meta, OpenAI, and Oracle later this year. AMD says it already has the memory it needs.
Why This Matters
Both chipmakers are racing to build next-generation AI systems just as the entire industry runs into a severe memory shortage.
That raises a real question: is NVIDIA Corporation (NASDAQ:NVDA) genuinely caught off guard on supply, or is AMD’s confidence about locking up memory the bigger story here?
The Bull and Bear Case: Nvidia
Even with less memory, Nvidia still controls more than 95% of the data center GPU market. Spreading scarce memory across more GPUs lets NVIDIA Corporation (NASDAQ:NVDA) protect production volume, and a lower-memory version could become a genuinely cheaper option that broadens its customer base. Nothing is finalized yet, and Rubin Ultra doesn’t ship until late 2027, giving Nvidia time to adjust. The company has also struck a $500 billion partnership with SK Hynix’s parent company to co-develop future memory technology, a move Nvidia VP Raj Mirpuri said it would “help us secure a stable supply.”
However, the memory downgrade sits awkwardly next to NVIDIA Corporation (NASDAQ:NVDA)’s public confidence in mid-July, when hardware SVP Andrew Bell said the company was “in front of the memory problem.” Running less memory per GPU could force AI companies to buy more chips to run the same large models, adding cost even if the sticker price drops. High-bandwidth memory can account for more than half of an advanced AI chip’s total cost, so any cut to it changes the overall value customers were counting on.
The Bull and Bear Case: AMD
Advanced Micro Devices, Inc. (NASDAQ:AMD) says its Helios system beats Nvidia’s rack-scale systems on some workloads, and unlike Nvidia, it has already secured the HBM it needs through close ties with all three major memory suppliers (Samsung Electronics, SK Hynix, and Micron Technology). Major customers have already committed: Meta plans to deploy up to six gigawatts of AMD chips, and Microsoft, OpenAI, and Oracle have all signed on. Data center revenue is AMD’s fastest-growing segment and, as of Q1 2026, makes up the majority of AMD’s total revenue, up 57% year over year.
Nonetheless, Advanced Micro Devices, Inc. (NASDAQ:AMD) still holds a small fraction of the data center GPU market next to Nvidia’s dominance, and Helios is a first-generation product carrying real execution risk. Its ROCm software ecosystem still trails Nvidia’s CUDA, which remains far more established with developers. Helios also reportedly costs more per system than Nvidia’s Vera Rubin, an estimated $5 million to $5.5 million versus $3.5 million to $4 million, according to the Futurum Group, a premium that needs to be justified by performance.
Insider Monkey’s Hedge Fund Data
NVIDIA Corporation (NASDAQ:NVDA) was the most widely held chip stock in Insider Monkey’s database as of Q1 2026, with 275 hedge funds owning shares, up from 264. Advanced Micro Devices, Inc. (NASDAQ:AMD) had 134 holders, up from 132.
For comparison, Broadcom had 173 hedge fund holders, and TSMC had 234. Nvidia remains far more popular with hedge funds than AMD and even outpaces fellow chip giants Broadcom and TSMC.
Conclusion
Nvidia controls so much of the market that it can safely test different memory options. Meanwhile, AMD has to prove its Helios system can actually win customers over before Nvidia takes full control again.
Overall, hedge funds favor NVIDIA Corporation (NASDAQ:NVDA) over AMD.
While we acknowledge the risk and potential of NVDA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NVDA and that has 10,000% upside potential, check out our report about this cheapest AI stock.
READ NEXT: NVIDIA Corporation (NVDA) and Naver: A $1 Billion AI Bet in South Korea and The Crown Keeps Switching Hands: Apple Inc. (AAPL) vs NVIDIA Corporation (NVDA).
Disclosure: None. This article is originally published at Insider Monkey.
