Advanced Micro Devices (AMD) shares soared on Thursday following the exciting launch of their AI-focused data center chip, the MI300X, targeting a market potentially worth $45 billion in the coming years. This strategic move marks AMD’s bold challenge to Nvidia’s stronghold in the large-language-model AI market with its dominant H100 graphics-processing-unit chip.
In June, AMD estimated the total addressable market for data center chips at around $30 billion. The launch of the MI300X, designed to boost generative-artificial-intelligence technologies, and the Instinct M1300A, a next-generation semiconductor for supercomputing, showcases AMD’s commitment to innovating in the AI space.
Analysts are buzzing about the potential of the MI300X to disrupt Nvidia’s dominance. AMD’s projection for the MI300X is impressive, with expectations of generating $400 million in sales in the fourth quarter alone, while the MI300 family could see over $2 billion in sales throughout 2024.
CEO Lisa Su highlighted the growing complexity and size of large language models at the launch event in Santa Clara, California, emphasizing the crucial role of GPUs in driving AI adoption. “The availability of GPUs is the single most important driver of AI adoption,” Su stated, underscoring AMD’s strategic focus on this segment.
AMD’s stock reacted positively to this news, climbing 7.2% in mid-day trading to $125.29 per share, reversing the six-month trend to positive territory. The company’s fourth-quarter forecast anticipates sales of around $6.1 billion, with gross margins at approximately 51.5%, following a mixed third-quarter report that balanced PC revenue gains with declines in gaming.
KeyBanc Capital Markets analyst John Vinh expressed confidence in AMD’s latest offering, noting that while there’s room for software improvement, the product is ready for “volume deployment.” He maintained his overweight rating on AMD, encouraged by the company’s entry into a rapidly growing market and endorsements from high-profile customers.
AMD’s bold step into the AI chip market with the MI300X signals not only a competitive challenge to Nvidia but also a significant expansion of the company’s market presence in a highly lucrative and evolving sector. Investors and tech enthusiasts alike are keenly watching how AMD’s latest innovations will shape the future of AI computing.