Advanced Micro Devices (NASDAQ:AMD), right on Intel’s heels, sparks reassurance in investors during market uncertainty. The company even surpassed its modest Q1 guidance, leading to expectations of more impressive longer-term growth among bulls. AMD projected $3.5 billion in data center revenue for 2024, as its Q4 revenue skyrocketed 38%. This is central to this AMD stock forecast.
In the field that’s undoubtedly dominated by Nvidia (NASDAQ:NVDA), AMD faces challenges in the AI chip race. Specifically, in the world of AI software, AMD is behind. Software rewriting is necessary to switch from AMD’s ROCm system to Nvidia’s CUDA system. Still, AMD offers a worthy substitute for Nvidia for cloud computing companies with expansion in mind.
Given AMD’s victories against Intel (NASDAQ:INTC) in the X86 server realm, it’s a company that’s clearly worth paying attention to. The question is whether AMD is coming for Nvidia next, and could gain some key market share in the AI race. Let’s dive in.
Strong Forward Guidance
In October 2023, AMD soared above expectations by predicting $400 million in revenue from MI300 AI GPU sales in Q4. AMD CEO Lisa SU later confirmed this achievement, marking a key turning point for the company. If it can hit its own internal targets for growth, investors will pay attention to the company’s future guidance more closely. Thus far, this guidance remains strong.
AMD has a number of key partnerships with other mega-cap tech companies in need of more computing power. These partnerships have driven the company’s most recent projections of achieving $3.5 billion of data center revenue in 2024. Now, I’m not certain the company can hit these targets, but given its current quarterly run rate of about $900 million in this segment, these estimates may prove to be light.
In accordance with analysts’ expectations of $4 billion to $8 billion in AI-related revenue, AMD raised its AI chips sales revenue guidance over the next quarter. This is an indication of further growth, and should entice long-term investors to this chip name.
Streamlined Solutions for AI
AMD has widened its horizons, recently revealing the AMD Embedded+, a system that provides a combination of AMD Ryzen™ Embedded processors and Versal™ adaptive SoCs on a single board. This integration smooths out qualification and builds processes, allowing for common software platforms for diverse applications. The system prioritizes low latency and energy efficiency, as Chetan Khona, AMD’s Senior Director of Industrial, VIsion, Healthcare, and Sciences Markets, puts a spotlight on real-time sensor data in automated systems.
Sapphire Technology has also brought the AMD Embedded+ ODM Solution to center stage, via the Sapphire Edge+ VPR-4616-MB. A Ryzen Embedded R2314 processor and Versal AI Edge VE2302 Adaptive Soc power this product. It offers versatile capabilities in a compact Mini-ITX form factor, consuming as little as 30W of energy to operate.
Adrian Thompson, senior VP of global marketing, celebrated the Embedded+ system for its impressive reliability and reduced R&D costs. The Embedded+ qualified VPR-3616-MB is now available for purchase, and is a key product investors should keep an eye on. This is central to this AMD stock forecast.
Trust the Process with AMD
AMD hopes to reach an impressive market share of between 15% to 25% of the AI chip market in 2024. If the company can see easing from previous supply shortages, it’s possible this chip giant could go head-to-head with Nvidia.
AMD’s AI revenue forecast may be aggressive and be a reason for some investors to pause around this stock. But as demand for AI chips grow, AMD should be able to produce outsized gains as it grows its market share. At least, that’s the bullish argument.
For now, I remain cautiously bullish around AMD stock. Given what its peer Nvidia has done in recent weeks, this stock should see some carryover from investors.
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 InvestorPlace.com Publishing Guidelines.
