Advanced Micro Devices (NASDAQ:AMD) stock isn’t an also-ran Nvidia (NASDAQ:NVDA) in terms of capabilities, though Nvidia’s high-performance chips do take the cake in terms of performance. Both companies have found success in this large market, leading to recent all-time highs for their stocks.
Recent news of China’s plan to remove foreign-made chips from its telecom systems by 2027 is making investors hesitant. The government told telecom providers to stop using chips from Intel and AMD. Let’s dive into what investors may want to consider with this particular headwind, and if AMD stock is still a buy in this light.
China Plans to Replace AMD and Intel
According to recent reports, China aims to oust foreign chips from its telecom networks by 2027. The Ministry of Industry and Information Technology mandates this replacement, primarily affecting Intel (NASDAQ:INTC) and AMD. This mirrors the US’s move against Huawei and restrictions on chip exports to China.
China pivoted to developing its processors, exemplified by Huawei’s release of a phone featuring a domestically made 5G chip by SMIC. Questions linger over the performance of China’s chips compared to Nvidia, Intel, and AMD.
China’s strategy to exclude foreign chipmakers may impact Intel and AMD’s revenue, with 27% and 15%, respectively, from China in 2023.
New AI PC Chips and AMD Stock
Even though China plans to wipe out AMD chips, I don’t think it will significantly affect the company.
In fact, AMD introduced new processors for AI-enabled PCs, aiming to challenge Nvidia and Intel in the AI PC market. These chips will power PCs from HP and Lenovo starting Q2 2024, competing directly with Nvidia’s and Intel’s offerings.
Unlike Nvidia, AMD outsources chip fabrication to Taiwan Semiconductor Manufacturing Company (NASDAQ:TSMC), which is known for its advanced nanometer technology.
In January, AMD unveiled the Ryzen 8000G series desktop processors, built on a 4-nanometer process, boasting high gaming and content creation performance.
AMD and Intel emphasized the rise of AI PCs, anticipating increased adoption after ChatGPT’s launch in November 2022.
AMD’s president Victor Peng and Intel CEO Pat Gelsinger foresee the AI PC market expanding, with Gelsinger deeming it the highlight of the upcoming year.
AMD Ryzen Will Be Key to Watch
AMD unveiled new additions to its commercial mobile and desktop AI PC range on April 16, offering enhanced productivity and advanced AI and connectivity features for business users. The Ryzen™ PRO 8040 Series is the latest x86 processor designed for business laptops and mobile workstations.
In comparison, the Ryzen PRO 8000 Series desktop processor, which made its debut, is an AI-enabled desktop processor tailored for business users, promising top-notch performance with minimal power consumption.
AMD extends its AI PC dominance with Ryzen AI integration in select models. These processors boast enhanced AI processing power through CPU, GPU, and dedicated on-chip neural processing unit.
These processors offer up to 16 dedicated NPU TOPS and 39 total system TOPS, enhancing AI-enabled collaboration, content creation, and data analytics.
Additionally, AMD PRO technologies provide enterprise-grade manageability, security features, and platform longevity for simplified IT operations and enhanced security.
Buy and Hold AMD Stock
The crucial question remains: Can AMD’s M1300 chips sufficiently compete with Nvidia’s H100 chips? While AMD’s chips excel in specific applications and are more cost-effective, Nvidia maintains market dominance. This suggests a potential shift in perception could greatly benefit AMD.
Thus, AMD stock may either surge forward or continue as a pursuer, both scenarios likely boosting share prices.
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.
