Advanced Micro Devices, Inc. (AMD) experienced a significant drop in its stock value following the announcement of new artificial intelligence (AI) chips, as investors awaited further insight into customer engagements and financial outcomes. This decline marked the company’s steepest drop in over a month, with shares falling by 4% to $164.18 on Thursday, despite an 11% year-to-date increase.
During an event held in San Francisco, AMD’s CEO, Lisa Su, highlighted the company’s ambition to compete directly with Nvidia Corporation in the booming AI processor market. Su emphasized that the recently unveiled MI325X processors would outperform their Nvidia counterparts, asserting that systems based on these new chips would soon be available. The MI325X features advanced memory technology that enhances its AI performance, especially in tasks related to inference—a crucial aspect of AI processing.
“This fast-growing sector presents a multiyear opportunity,” stated Su in a recent interview. AMD aims to capture a slice of the lucrative AI accelerator market, which has become vital for companies developing cutting-edge artificial intelligence applications. With a projection of $4.5 billion in revenue from these new chips for the current fiscal year, AMD is banking heavily on this emerging technology. The market for AI chips is expected to reach an astounding $400 billion by 2027, further underscored by Su’s anticipation that this figure could rise to $500 billion by 2028.
While AMD is gaining momentum, it still faces challenges in surpassing Nvidia’s established market dominance. Investors and analysts are keenly focused on AMD’s upcoming quarterly earnings report, set to be released later this month, which could shed light on the company’s progress in securing clients and financial performance within the AI landscape.
In addition to its AI endeavors, AMD also announced a new line of server processors utilizing its “Turin” technology during the San Francisco event. With the introduction of its fifth-generation EPYC central processing units (CPUs), the company aims to reclaim market share previously held by Intel. Su reported that AMD now commands 34% of the server processor market in terms of revenue, a significant feat considering Intel had once monopolized this market with a staggering 99% share.
Beyond its product innovations, AMD is also striving for more supply chain diversification. Su expressed the company’s intention to explore partnerships with Taiwan Semiconductor Manufacturing Company’s new facility in Arizona, keeping an open mind toward collaborations with companies like Intel and Samsung Electronics for future manufacturing needs.
In contrast to Nvidia’s more closed-off business model, AMD promotes a collaborative approach, inviting partnerships across the tech spectrum. Su has clearly stated, “We don’t think we’re the only ones who have good ideas,” highlighting AMD’s strategy of fostering a more open environment within the tech industry.
With the stakes high in the AI processor market, AMD’s commitment to innovation and collaboration positions it as a strong contender in the race against competitors like Nvidia, aiming to carve out a more substantial share in the rapidly evolving landscape of artificial intelligence. The anticipation surrounding AMD’s future developments continues to grow, and investors will be watching closely as the market adapts to the demands of AI technology.