Advanced Micro Devices Inc. (AMD) has made it evident that it is a formidable contender against Intel Corp. But now, they’re setting their sights on a bigger player – Nvidia Corp., the semiconductor behemoth that recently crossed a trillion-dollar valuation.
The limelight in AMD’s forthcoming earnings report will shine brightly on its brand-new artificial intelligence accelerator chip. Many see this chip as AMD’s golden ticket to square up with Nvidia’s H100, a chip that majorly contributed to Nvidia’s meteoric rise in valuation. The function of these chips? They play a crucial role in AI training by feeding vast amounts of data to the software, making it sharper and more efficient. Nvidia is presently the dominant force in this segment, and its dominance is reflected in its stock price which has nearly doubled this year.
Wayne Kaufman, the chief market analyst at Phoenix Financial Services, mentioned, “While the PC sector is showing signs of revival, the real game-changer everyone is banking on is AI.” He pointed out that Nvidia has capitalized on this, and the industry is hopeful that AMD will too.
On Tuesday, AMD’s stocks experienced a slight dip by 0.9%. Lisa Su, AMD’s Chief Executive Officer, will delve into the company’s strategy concerning the evolving PC market and the lukewarm demand for server chips – both pivotal factors influencing AMD’s immediate future.
Yet, the focal point of inquiries is anticipated to be the MI300 chip, which AMD has announced will launch in the upcoming quarter. The pace at which this product gains traction will be instrumental in steering the company’s stock direction. There has been a 47% surge in AMD shares this year, an impressive feat, albeit a decrease since June when AI products were the talk of the town.
It’s noteworthy that Su has been instrumental in AMD’s resurgence, steering it out from the looming shadow of Intel and capturing the market with innovative products. Despite Intel’s recent report highlighting a rejuvenated PC market, the server market paints a different story. Here, AMD has secured a significant share, even though the demand has been tepid, with many corporations choosing to invest in accelerators over the conventional processors offered by giants like Intel and AMD.
During the August earnings call, the MI300 chip became a hot topic with about 40 mentions. Su seemed keen on striking the right chord between her enthusiasm for the product and tempering revenue expectations. She refrained from sharing exact financial predictions and even countered an analyst’s estimate as being overly optimistic.
According to Stacy Rasgon, an analyst from Sanford C. Bernstein, the current buzz around AMD revolves around their datacenter and AI ventures. He predicts that while MI300 will be the focal point in the upcoming year, the actual volume surge might only manifest in the latter half. This timeline suggests that Nvidia will be gearing up to refresh its flagship chip around then.
However, one consensus between Su and her peers at Intel and Nvidia is the vast potential of the AI systems market. Su envisions the market for accelerators, like MI300, to balloon to a staggering $150 billion by 2027.
It’s worth noting that AMD and Nvidia aren’t strangers to competition. Both giants are at the forefront of providing graphics chips for gaming PCs. These chips, when optimized for data centers, become powerhouses in AI training due to GPUs’ capacity for parallel computing, where multiple tasks are executed simultaneously.