Major points
- The CEO of AMD, Lisa Su, spoke on Wednesday about the previously disclosed Instinct MI300X, a sizable graphics processor intended for servers focused on artificial intelligence, and how Microsoft and Meta had committed to using the chip.
- The increase in AMD stock prices on Thursday indicates that investors think the company can overtake Nvidia in the AI processor industry.
Reports
AMD experienced a remarkable 9.9% surge in shares on Thursday, closing at $128.37, marking its most impressive performance since May and achieving the highest close since June. This significant boost follows the recent launch of AMD’s cutting-edge artificial intelligence chips, positioned to rival Nvidia in driving AI applications.
During Wednesday’s announcement, AMD CEO Lisa Su shared insights into the Instinct MI300X, a powerful graphics processor tailored for AI-oriented servers. Notably, major players like Microsoft and Meta have already committed to integrating this advanced chip into their systems.
In a landscape where Nvidia has dominated the AI chip market, there’s a growing trend among cloud providers and tech companies to explore alternatives that offer cost savings and enhanced flexibility.
The sharp increase in AMD’s stock market price on Thursday suggests that investors have a strong conviction that the business can overtake Nvidia in the AI chip industry. AMD is well-positioned for expansion even though market projections for Nvidia’s AI revenue are lower than its projected $2 billion in AI GPU sales by 2024. Wall Street expects Nvidia to sell more than $16 billion worth of processors for data centers this quarter, not just AI GPUs.
AMD’s highly anticipated high-end chip is scheduled to start shipping in significant quantities next year, creating anticipation among tech enthusiasts and investors alike.
Deutsche Bank analyst Ross Seymore, in a note on Thursday, emphasized how AMD’s strategic approach positions it to leverage the rapidly expanding AI Total Addressable Market (TAM). Seymore highlighted AMD’s impressive product performance metrics and the accumulation of key customer partnerships.
According to Citi analysts, AMD could potentially secure about 10% of the total AI chip market, showcasing the company’s growing influence in the industry.
During Wednesday’s launch event, CEO Lisa Su expressed optimism about the AI chip market’s potential, estimating it could reach $400 billion over the next four years—double AMD’s previous projection. Su emphasized that AMD doesn’t necessarily need to surpass Nvidia to succeed in the expansive AI chip market, expected to exceed $400 billion by 2027. Su believes that, given the market’s size, AMD can secure a substantial and rewarding piece of this flourishing industry.