Shares of Advanced Micro Devices (NASDAQ:AMD) drops 0.38% in afterhours in last trading session as the company recently launched its data center and AI technology event, where it unveiled its long-awaited MI300 processor tailored for AI workloads. Its objective is to wrest some of the majority market share in this category from its main opponent, Nvidia.
The new MI300 processor is already intended to power the world’s fastest supercomputer, which is anticipated to go online later this year, but AMD may be on the verge of a far larger customer. Here are five reasons why investors should add AMD stock to their portfolios right now.
The leading chipmaker, Advanced Micro Devices (AMD) announced its latest artificial intelligence-optimized semiconductor and data center technologies. Investor interest in AI stocks has recently boosted AMD stock. With the developments, AMD hopes to take some of the AI firepower away from market leader Nvidia (NVDA).
AMD showcased its newest Epyc server processors and a new AI accelerator chip family at a business event on Tuesday. AMD unveiled fourth-generation Epyc CPUs as well as a glimpse of its Instinct MI300 Series accelerator family.
CEO of AMD VIEW
The high-end Instinct MI300X accelerator processor, according to CEO Lisa Su, is “the world’s most advanced accelerator for generative AI.” The device is a graphics processing unit that has been designed to handle huge language model workloads.
According to a corporate press release, AMD is already sampling the first of its MI300 devices to clients. It intends to release the items in the fourth quarter.
Analyst Views on Development
Barclays analyst, Blayne Curtis confirmed following the event that his overweight, or buy, rating on AMD shares. He also increased his price goal from 90 to 145.
In a letter to clients, he stated that the event went mostly as predicted, with investors focusing on AI and some encouraging product announcements, but no significant AI customer announcements or financial forecasts to really hang your hat on.
“There is still a lot of work ahead for AMD in AI,” Curtis noted, “but the overall message is that the AI market is very large and AMD has an opportunity to take some share away from Nvidia.”
AMD VS Nvidia Market Valuation Gap
Nvidia Corp (NASDAQ: NVDA) presently controls an estimated 90% of the market for AI-enabled data center CPUs. According to AMD’s CEO, Jensen Huang, there is over $1 trillion in existing data center infrastructure that needs to be updated to accommodate accelerated computing and AI workloads, so it’s no wonder AMD is attempting to capitalize on that potential.
The details around AMD’s new MI300 processor have been keenly awaited by the tech industry, and now that the cat is out of the bag, there’s a lot for investors to look forward to. The MI300 will be available in two variants. First, the MI300A is a 3D stacked chip package that combines CPUs and GPUs to form AMD’s first-ever advanced processing unit (APU) for data centers.
Nvidia just reached a $1 trillion value as a result of its most recent earnings release, in which it outperformed Wall Street forecasts and upped its sales outlook for the upcoming quarter by a remarkable $4 billion (compared to the Street’s estimate). AMD’s MI300 hardware is set to be released later this year, and if the firm can acquire a few high-profile clients, such as AWS, it might see a significant improvement to its financial performance.
AMD stock has more than quadrupled this year, but it is still down 18% from its all-time high, in sharp contrast to Nvidia stock, which is setting new highs nearly daily. If AMD can get any market share in the AI data center field over the next several quarters, its stock should skyrocket.
AMD is presently valued at $204 billion, but I believe it will join Nvidia in the $1 trillion club within the next decade, so long-term investors may gain the most.
