SPECIAL REPORT The Top 7 Stocks for 2024

AMD Stock Alert: Big Tech Chooses Advanced Micro Devices Over Nvidia

Advertisement

  • Shares of semiconductor specialist Advanced Micro Devices (AMD) popped sharply on Thursday.
  • Several tech enterprises stated that they will use the chipmaker’s latest AI-focused MI300X.
  • AMD stock popped on the credibility boost.
AMD stock - AMD Stock Alert: Big Tech Chooses Advanced Micro Devices Over Nvidia

Source: JHVEPhoto / Shutterstock.com

Semiconductor giant Advanced Micro Devices (NASDAQ:AMD) enlivened a modestly positive session on Wall Street as several top technology enterprises stated that they will use the company’s newest chip designed for artificial intelligence-based applications. Fundamentally, it’s a clear sign that the innovation industry seeks alternatives to Nvidia (NASDAQ:NVDA) graphics processors. Naturally, the disclosure sparked significant bullish sentiment for AMD stock.

According to a CNBC report, Advanced Micro stated on Wednesday during an investor’s day conference that it signed up tech juggernauts Meta Platforms (NASDAQ:META) and Microsoft (NASDAQ:MSFT) to purchase its latest Instinct MI300X chip. Meta stated that it will use the semiconductor for AI inference workloads such as imaging editing and operating its assistant software. Microsoft will offer access to the MI300X chips through its Azure web service.

In addition, enterprise database software titan Oracle (NYSE:ORCL) will also incorporate Advanced Micro’s latest innovation. If that wasn’t enough of a confidence boost, OpenAI — the developer of the popular chatbot ChatGPT — stated that it will support AMD graphics processing units (GPUs) in one of its software products called Triton.

AMD states that it developed the MI300X on a new architecture, which should yield significant performance gains. Per CNBC, the chip’s most distinctive feature is that it integrates 192 gigabytes (GB) of an ultra-advanced memory type known as HBM3.

Credibility Boost Bodes Well for AMD Stock

While 2023 may go down as the year of AI, the underlying tech enterprises did not equally share in the riches. Most notably, shares of Nvidia soared about 225% since the beginning of the year. While it’s no slouch by any stretch of the imagination, AMD stock conspicuously lags its rival, up “only” 100% during the same period.

However, AND’s CEO, Dr. Lisa Su, would like to shift this narrative. Touting the MI300X as a viable alternative to Nvidia’s main AI GPU, the H100 chip, the chief exec hopes to grab a piece of the surging digital intelligence market with a compelling mix of performance and price.

Still, it should be noted that the company didn’t reveal pricing for the MI300X during its investor’s day conference. However, Nvidia’s H100 chip can cost around $40,000. Further, Su acknowledged that the MI300X will have to cost less to purchase and operate to convince other enterprises to hop aboard the AMD brand.

Nevertheless, one key benefit for AMD stock is the size of the total addressable market. According to Precedence Research, just the U.S. AI market alone reached a valuation of $103.7 billion last year. Further, it could hit $594 billion by 2032, representing a compound annual growth rate (CAGR) of 19.1% from 2023.

To Su’s point, the global AI chip market could see a value of over $400 billion in 2027. “And we could get a nice piece of that,” said the CEO.

Why It Matters

In the past three months, analysts have pegged AMD stock as a consensus moderate buy. This assessment breaks down as 24 buys, nine holds and zero sells. Overall, the average price target lands at $128.77, less than 1% up from the time of writing.

On the date of publication, Josh Enomoto 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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.


Article printed from InvestorPlace Media, https://investorplace.com/2023/12/amd-stock-alert-big-tech-chooses-advanced-micro-devices-over-nvidia/.

©2024 InvestorPlace Media, LLC