3 Reasons AMD Will Be Able to Steal Nvidia’s AI Crown


  • Advanced Micro Devices (AMD) has had a resilient year in terms of earnings results as chip demand rebounded.
  • Newly released AI chips will drive a significant amount of earnings growth in 2024.
  • The chip maker’s success in challenging large competitors will help it in its race against Nvidia.
AMD - 3 Reasons AMD Will Be Able to Steal Nvidia’s AI Crown

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After successfully stealing market share from key rival Intel, Advanced Micro Devices (NASDAQ:AMD) may be ready to come after Nvidia in the race to make the most advanced AI-powering chips.

While AMD has yet to commercialize its own AI chips, below are three reasons investors should not count the chip maker out just yet.

AMD Has Been Resillient

Close up of AMD sign in Markham, Ontario, Canada. Advanced Micro Devices, Inc. (AMD) is an American multinational semiconductor company.
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Robust financial results in 2023, amidst a tough semiconductor market environment, demonstrates the chip maker’s resilience. During the first quarter of 2023, AMD’s revenue declined 9% from a year-over-year perspective. However, CEO Lisa Su predicted the company would see improved demand in the second half of the year. So far, that has panned out.

While in the second quarter, the chip maker reported an even starker YoY revenue decline because of falling PC demand, AMD’s third quarter results were a bright spot.

The company reported Q3 earnings Oct. 31, and beat Wall Street estimates. In particular, Revenue in AMD’s Client group, which includes sales from PC processors, rebounded sharply as guided in prior earnings releases, rising 42% year over year to $1.5 billion.

The company also expects revenue from selling data center chips to rise significantly in the fourth quarter. These developments point to a company that is having a robust earnings year despite some macroeconomic headwinds.

AI Earnings Are Hot

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AMD is making its long-awaited foray into the AI chip space. The chip maker announced the MI300x GPU chipset in their second-quarter-earnings report. Investors wondered how AMD would commercialize its new GPUs. Some analysts were even losing hope as the year dragged on.

However, in their third quarter earnings report, the chip maker announced it expects to sell $2 billion in AI chips next year. If AMD can price competitively, there could be a clear opportunity for the company to capture market share.

AMD Goes After the Competition

Nvidia corporation (NVDA) logo displayed on smartphone with stock market chart background. Nvidia is a global leader in artificial intelligence hardware and software
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Entering a new market dominated by a large competitor would not be AMD’s first time. To the surprise of many, AMD’s CPUs had slowly been able to steal significant market share from Intel, and those trends do not appear to be reversing.

This was largely due to a few things. Intel had adopted an in-house manufacturing business model, while AMD took a fabless approach and outsourced the manufacturing primarily to Taiwan Semiconductor Manufacturing Company.

Intel eventually fell behind in the race to create a smaller node size for chips. AMD’s launch of the Ryzen desktop and mobile processors and the EPYC server processors offered better performance, power efficiency, and price than Intel’s counterparts did.

All of this to say, while AMD is late to the AI chip game, the chip maker can still grab significant market share if its go-to-market strategy is successful. Investors should be hopeful for what AMD might bring to the market soon.

On the date of publication, Tyrik Torres 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 InvestorPlace.com Publishing Guidelines.

Tyrik Torres has been studying and participating in financial markets since he was in college, and he has particular passion for helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.

Article printed from InvestorPlace Media, https://investorplace.com/2023/11/3-reasons-amd-will-be-able-to-steal-nvidias-ai-crown/.

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