Nvidia CEO Jensen Huang took a little time out of his quarterly earnings call on Thursday to revel in some of his competitors’ recent struggles.
Nvidia reported strong third quarter results that beat Wall Street expectations, with sales jumping 32% to $2.6 billion. Nvidia’s shares, which have already nearly doubled in price so far this year, gained another 3% in afterhours trading. That allowed Huang to spend most of the hour-long call touting his strategy and the company’s powerful graphics processor, or GPU, products that have caught on not just with avid video gamers but also with corporations and researchers using Nvidia’s chips for artificial intelligence and machine learning tasks.
But Advanced Micro Devices and Intel made some news earlier in the week, and a question about the developments from longtime Nvidia analyst Hans Mosesmann at Rosenblatt Securities gave Huang an opening to spin a tale of woe about his rivals.
First, on Monday, AMD and Intel announced a deal to cooperate on a niche hybrid chip for high-end laptops. Then on Tuesday the head of AMD’s entire graphics unit, industry star Raja Kudori, said he was quitting. On Wednesday, Intel announced it was hiring Kudori and starting its own effort to compete directly in the high-performance graphics chip market against AMD and Nvidia.
“There’s a lot of news out there,” Huang acknowledged. “Raja leaving AMD is a great loss for AMD and it’s a recognition by Intel probably that the GPU is just incredibly, incredibly important.”
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As Huang alluded, Nvidia is far in the lead in the fast-growing market for using graphics chips in servers and cloud data centers to run AI and machine learning programs. AMD (AMD) has pitched some of its Radeon graphics chips at the same market with much less success. And Intel has struggled to catch up without a GPU of its own and instead with a variety of different products including reprogrammable chips called field-programmable gate arrays, more standard server chips, as well as a new kind of chip that operates more like the human brain that it acquired when it bought startup Nervana Systems last year.
Even if Intel and Koduri succeed in creating new high-end GPU products, the effort would likely take years, Huang argued. “It’s just an enormous undertaking,” Huang said, noting that it can take three years to bring a new design to market. “You don’t walk in and have a new widget and a few transistors and all of a sudden speed up applications by a factor of 100 or 50 or 20. That’s something that’s inconceivable unless you do the type of innovation that we do.”
He also questioned the need for the new hybrid chip that the two rivals agreed to make with a central processor from Intel and a graphics component from AMD. Intel (INTC) said the new design would allow high-performance laptops suitable for gaming to be made much thinner. But Huang said Nvidia has such energy-efficient graphics chips that they can already be used in thin and powerful laptops.
Nvidia’s (NVDA) chips “have really set a new design point for the industry” and “really raised the bar,” he said.