AMD Stock (NASDAQ:AMD)
Investors may have been left feeling uninspired by Advanced Micro Devices (NASDAQ:AMD) big chip launch, but Wall Street was more enthusiastic about it and continues to believe that the semiconductor company can compete with Nvidia (NASDAQ:NVDA) and be a winner in artificial intelligence.
The share price was down 3.6%. On Tuesday, AMD (NASDAQ:AMD) Chief Executive Lisa Su unveiled the company’s newest artificial intelligence chip, which is known as the MI300X. During a presentation in San Francisco, she stated that customers will be able to test out the technology beginning in the third quarter and that production will ramp up during the fourth quarter.
In addition to this, Su forecasts that the total addressable market (TAM) for AI accelerators in data centers will increase to approximately $150 billion in 2027, up from approximately $30 billion this year.
The potential for further optimization of AMD’s new chip is one of the primary reasons why investors on Wall Street continue to be bullish on the product. When a brand-new piece of technology is first made available to the public, it almost always comes with a number of flaws and room for development. Investors believe that AMD will address the current shortcomings of the chip through firmware updates and subsequent iterations because the company has a track record of delivering updates and optimizations to its products. AMD has a track record of delivering updates and optimizations to its products.
AMD has positioned its new chip in such a way as to capitalize on the rapidly growing artificial intelligence market. The chip’s competitive pricing and performance in certain areas make it an attractive option for businesses and organizations that are looking to leverage AI technologies. This is despite the initial setbacks that were encountered. Investors on Wall Street are aware of the opportunities for growth and increased market share that lie ahead for AMD, and they have taken note of the fact that the potential for market expansion has not gone unnoticed.
The Cloud Division of Amazon Is Thinking About Purchasing New AI Chips From AMD
Amazon Web Services, the largest provider of cloud computing in the world, is mulling over whether or not to use new artificial intelligence (AI) chips from Advanced Micro Devices Inc., according to an AWS executive who spoke with Reuters. However, the company has not yet made a final decision.
The comments were made during an event hosted by AMD, during which the chip manufacturer outlined its strategy for the artificial intelligence market, which is currently dominated by competitor Nvidia Corp.
In the wake of the news, trading activity for AMD shares increased by 1.7% before the market opened. They ended the day Tuesday 3.6% lower after AMD did not reveal a flagship customer for an artificial intelligence chip that will be released later this year.
AMD Chief Executive Lisa Su outlined a strategy to win over major cloud computing customers during interviews with Reuters. The strategy entails providing customers with a menu of all the components required to build the kinds of systems that are capable of powering services that are comparable to ChatGPT but allowing customers to pick and choose which components they want to use while maintaining industry standard connections.
In spite of the recent decline, the company’s share price has increased by more than ninety percent so far in 2023, thanks to the increased interest in and hype surrounding artificial intelligence. Additionally, during Wednesday’s premarket trading, the share price was pointing more than 2% higher.
Analysts at KeyBanc Capital Markets, led by John Vinh, speculated that investors may have been let down by the fact that AMD did not announce Microsoft as a customer for the new chip, they stated that this may have led to investor dissatisfaction.
Vinh, on the other hand, referred to that as an “unrealistically high expectation,” given that customers won’t begin testing out the chip until the third quarter of this fiscal year.
He mentioned that another concern may be that AMD was unable to make the same performance claims as Nvidia (NASDAQ:NVDA), but he also mentioned that the company was still on track to gain market share as an alternative.
The research analysts continue to have a bullish outlook on the stock, and they have reiterated an Overweight rating with a price target of $150. This indicates that there is potential for a 20% increase relative to Tuesday’s closing price. According to what was stated, “all in all, we thought it was a constructive event,” and “we maintain that AMD stands to be a major beneficiary and share gainer in relation to generative AI.”
The analysts at Piper Sandler reaffirmed their Overweight rating for the stock and set a price target of $150 for it. They stated that the company possesses “all of the building blocks to address both cloud and enterprise customer needs.”
“We feel that the real star of the show was the commentary presented on AI strategy, with AMD taking the overall TAM up significantly from around $65 billion by 2025 to $150 billion by 2027,” they said. “We feel that the real star of the show was the commentary presented on AI strategy.”
The Stifel analysts increased their price target from $98 to $145, maintaining their Buy rating throughout the process. “While the absence of a formal customer announcement in conjunction with the road map update is likely to be questioned, we believe that the product specifications should enable AMD to gain traction in LLM [large language model]/AI markets,” they said. “While the lack of a formal customer announcement in conjunction with the road map update is likely to be questioned,”
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