Advanced microsystems (AMD) launched his clearest challenge to the dominance of the Nvidia (NVDA) in the hot market for chips that power artificial intelligence applications. AMD stock faltered after the announcement.
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At a company event on Wednesday, AMD launched its Instinct MI300 Series family of accelerators. As previewed earlier this year, the chips are designed to handle the massive workloads of AI applications.
“This pace of innovation is faster than anything I’ve ever seen before,” CEO Lisa Su said at the event in San Jose, California. “At AMD, we are very well positioned to power this end-to-end infrastructure that defines this new era of AI.” Su predicts that the market for AI accelerator chips in data centers will grow 70% annually to reach more than $400 billion in 2027.
AMD has unveiled the MI300 family of chips designed to handle the heavy computing workloads of AI systems. The company had forecast more than $2 billion in sales in 2024 from the new chips.
The rise of AI, including generative AI applications such as OpenAI’s ChatGPT and Google’s Bard, has driven high demand for chips that can deliver greater processing power. Nvidia, known for its powerful chips used for games and Hollywood special effects, took the lead when AI started becoming a big trend a decade ago. Today, AMD is looking to compete with Nvidia, whose H100 AI chip is considered the market leader.
On the stock market today, AMD stock slipped 1.6% to 116.45 in recent action. NVDA stock, meanwhile, is down more than 2% at 456.22.
AMD stock: focus on inference
CEO Su said AMD’s latest chip has industry-leading capacity and bandwidth. The chip is on par with existing competition in data model training, Su said. But she said AMD’s chip should outperform competitors in inferencing or running AI applications once models have been trained.
“I have to say, this is truly the most advanced product we have ever built,” Su said. “And it’s the most advanced AI accelerator in the industry.”
Su also updated AMD’s projections for the data center AI chip market, which the company had estimated would grow from $30 billion in 2023 to $150 billion by 2027. The company now sees the total market reaching more than $400 billion.
“It’s really clear that demand is growing much, much faster” than expected, Su said.
The AMD event also brought together executives from Microsoft (MSFT), Meta (META) And Oracle (ORCL) who explained how their companies work with the chip giant. Microsoft said AMD’s new chips were available for customers of its cloud business to evaluate starting today.
Challenge Nvidia
from Nvidia processors run most data centers that power generative artificial intelligence products. This helped fuel consecutive quarters of triple-digit sales growth for Nvidia. Additionally, NVDA stock’s 215% gain this year is the largest in the S&P 500.
But the challengers are coming. Alongside AMD’s announcement on Wednesday, Intel (INTC) next week will host an event called AI Everywhere to highlight new processors for data centers.
AMD stock has gained about 70% this year, thanks to its push into AI data center products.
Furthermore, the company latest earnings report broke a three-quarter streak of year-over-year profit declines for AMD. AMD stock gained nearly 10% the day after its Oct. 31 earnings release, headlined by the company’s forecast of more than $2 billion in sales in 2024 for its AI accelerators MI300.
The 2024 sales forecast “supports the view that AMD is well positioned to participate in the large and growing AI-generation computing market,” Goldman Sachs analyst Toshiya Hari wrote in a client note on 1 november.
Additionally, Raymond James analysts led by Srini Pajjuri wrote in a client note previewing Wednesday’s event: “We see no reason why AMD cannot capture 10-20% of the gaming market share. AI accelerators worth over $100 billion in the long term, which could mean double-10-digit revenue growth and margin expansion for the next 2-3 years. »
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