AMD shares rose 9.9% on Thursday to close at $128.37, marking the stock’s best day since May and its highest close since June. The surge comes a day after the company unveiled new artificial intelligence chips that will compete with Nvidia
to power AI applications.
On Wednesday, AMD CEO Lisa Su discussed the previously announced Instinct MI300X, a large graphics processor designed for AI-focused servers, and said Microsoft and Meta had committed to using the chip.
Nvidia has dominated the AI chip market for the past year, but cloud providers and technology companies have been looking for an alternative to save costs and provide flexibility.
Thursday’s rise in AMD’s shares suggests investors believe the chipmaker can take some of the AI chip market from Nvidia, even though the company forecasts just $2 billion in AI GPU sales in 2024 – below market expectations for Nvidia’s AI revenue. Wall Street expects Nvidia to post more than $16 billion in data centre sales in the current quarter alone, although that metric includes chips other than AI GPUs.
AMD’s new high-end chip will begin shipping in significant quantities next year.
“We believe today’s event highlighted that AMD remains extremely well positioned to capitalise on the rapidly expanding AI TAM as they continue to build customer partnerships and launch products with impressive (and extremely competitive) performance metrics,” Deutsche Bank analyst Ross Seymore wrote in a note on Thursday.
Citi analysts estimated in a note on Thursday that AMD could end up with about 10% of the total AI chip market.
Su said at Wednesday’s launch event that the company believes the total AI chip market could grow to $400 billion over the next four years, double the company’s previous estimate. Su suggested to reporters that AMD doesn’t need to beat Nvidia to do well in the AI chip market because it will be so big.
“I think it’s clear to say that Nvidia has to be the vast majority of that right now,” Su told reporters on Wednesday, referring to the AI chip market. “We think it could be over $400 billion by 2027. And we could get a nice piece of that.”
