AMD Leaps As Chipmaker Takes On Nvidia In $150 Billion AI Market
"We have a chip that is incredibly powerful and we believe will be a significant winner in the AI market," said AMD CEO Lisa Su.
Updated at 8:49 am EDT
Advanced Micro Devices (AMD) - Get Free Report shares moved firmly higher Wednesday after the chipmaker revealed its latest AI chip in move it hopes will challenge the market leadership or its trillion-dollar rival Nvidia (NVDA) - Get Free Report.
CEO Lisa Su told an audience in San Francisco yesterday that the chips, called MI300X and MI300A, will hold significantly more memory that will allow customers to design and maintain large-language AI systems similar to ChatGPT for less money in a market it sees growing to around $150 billion by 2027. AMD also released its cloud-optimized server CPU, Bergamo, that will used by Meta Platforms (META) - Get Free Report.
"The generative AI, large language models have changed the landscape," Su said. "The need for more compute is growing exponentially, whether you're talking about training or about inference."
"There’s an incredible amount of technology on here ... we’re talking about the most complex chip we’ve ever built," Su said. "The whole purpose is to make AI much much more accessible. So everybody who wants to use AI needs more GPUs, and we have a GPU that is incredibly powerful; very, very efficient; and we believe will be a significant winner in the AI market."
AMD shares were marked 2.5% higher in pre-market trading to indicate an opening bell price of $127.62 each. Nvidia shares, which closed with a market value of $1 trillion for the first time ever last night, slipped 0.6% to $407.70 each.
The chips are expected to ship in volumed by the fourth quarter of this year, AMD said, with samples expected over the summer months.
Reuters also reported that Amazon (AMZN) - Get Free Report could be a potential customer for the new chips, adding them to its Web Services Division. Microsoft (MSFT) - Get Free Report is also expected to be a buyer of the MI300X chips.
KeyBanc Capital Markets analyst John Vinh, who carries an 'overweight' rating with a $150 price target on AMD stock, thinks the group will benefit from "significant market demand for a second-source alternative to Nivdia" and "stands to be a major beneficiary and share gainer as it relates to generative AI."
The new chip launch could soften the blow from AMD's muted first quarter earnings, which were published last month, amid ongoing weakness in the market for personal computers.
AMD said non-GAAP earnings for the quarter came in at 60 cents per share, a 47% decline from the same period last year but 4 cents ahead of Street forecasts. Group revenues, AMD said, fell 9.2% to $5.35 billion, again topping analysts' forecasts of a $5.3 billion tally.
Looking into the current quarter, AMD said it sees revenues in the region of $5.3 billion, plus or minus $300 million, compared to the Refinitiv forecast of $5.48 billion
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