AMD’s AI Chips Can Beat Nvidia, Buy the Stock Now

Stocks to buy

Advanced Micro Devices (NASDAQ:AMD) stock rebounded after a challenging start to the year. A 42% YoY surge in CPU sales powered AMD’s reported revenue of $5.8 billion, with adjusted earnings of $0.70 per share. The company should ship MI300X chips to cloud customers soon, anticipating AI accelerators to boost market share.

AMD stock should see further gains, with analysts projecting an 11% increase from current levels. AMD’s Q3 financial results surpassed expectations, with earnings of 70 cents per share and a 4% YoY increase in revenue to $5.8 billion. The highlight was AMD’s impressive 2024 forecast, expecting $2 billion in AI microchip sales.

Optimistic Q4 Projections for AMD Stock

AMD stock surpassed Q3 earnings expectations but presented a lower Q4 forecast, causing a brief dip in stock value. The company’s AI chips, MI300A and MI300X, are progressing well for anticipated volume production this quarter, boosting confidence for a positive 2024 outlook in the AI chip sector.

AMD CEO Lisa Su expects data center GPU revenue to hit approximately $400 million in Q4 and surpass $2 billion in 2024. Q3 net income rose to $299 million, with revenue up 4% to $5.6 billion. AMD aims for significant growth in its data center business, emphasizing its commitment to the market with recent AI acquisitions and software enhancements.

Su also highlighted the growth in generative AI workloads during the earnings call. The Client group, covering PC processors, saw a 42% year-over-year revenue increase to $1.5 billion.

The embedded segment revenue declined 5% to $1.2 billion, attributed to a weak communications market. Gaming segment sales dropped 8% to $1.5 billion, impacted by fewer “semi-custom” chip sales for consoles like PlayStation 5.

AMD Announces Instinct MI300 Event

AMD unveiled the next-gen AMD Instinct MI300 data center GPU accelerator family during the “Advancing AI” event on December 6, 2023. AMD Chair and CEO Dr. Lisa Su, along with executives, AI ecosystem partners, and customers, discussed the company’s impact on the AI, adaptive, and high-performance computing landscape.

AMD has begun shipments of Instinct MI300A accelerated processing units to the Lawrence Livermore National Laboratory for the El Capitan supercomputer, boasting performance exceeding 2 ExaFLOPS. The MI300A, designed with three eight-core Zen 4 chiplets and multiple CDNA3 chiplets, is optimized for AI and high-performance computing workloads.

AMD Stock Is Certainly Worth a Look Right Now

AMD’s Genoa-based EPYC server CPUs achieved over 50% sequential revenue growth last quarter, while the initial shipment of Instinct MI300 GPU accelerators for high-performance computing began. With production set to rise, the data center segment expects to surpass $2 billion in revenue next year, a significant uptick from this quarter’s sales of around $1.6 billion. 

Additionally, the forthcoming launch of AMD’s next-gen EPYC server CPU, Turin, in 2024 is poised to further propel data center momentum.

Last quarter saw the introduction of 50+ laptops featuring AMD’s new Ryzen 7000 chips. Collaborating with Microsoft, AMD is leveraging its on-chip AI engine for advancements in the next Windows release, potentially challenging Nvidia’s dominance in data center AI acceleration.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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