Nvidia (NASDAQ:NVDA) maintains its AI leadership with 70% global market control of high-performance computing chips. However, Advanced Micro Devices (NASDAQ:AMD) has made significant inroads into these key markets. This is especially true in the company’s Data Center segment, which has almost doubled its share over two years. The introduction of the “MI300X” AI microchip is poised to expand AMD’s presence in the AI market. Does this make AMD stock a buy?
Let’s dive into where AMD currently stands in the global chip race, and if this is a stock worth betting on right now.
Earnings Have Been Very Good
AMD has posted consistently strong earnings, with Q2 results surpassing expectations. Earnings per share came in at 58 cents, compared to the anticipated 57 cents, and revenue for the period exceeded forecasts at $5.36 billion. In Q3, AMD predicts $5.70 billion in sales, higher AI R&D investment, and plans for AI-focused chips and software.
The MI300X microchip will enter full production in Q4, impacting earnings from early next year. AMD’s upcoming Q3 earnings report is due around October 31.
The AMD MI300X Will Bring Success
In the realm of ChatGPT, the NVIDIA A100 and H100 GPUs currently lead in fulfilling the demands of Large Language Models. AMD aims to challenge this with the MI300x GPU, set to launch later this year. CEO Lisa Su shared exciting details at a recent data center event.
Dr. Su introduced an enhanced MI300 APU, featuring 2 additional GPU dies, increasing compute power and memory. The MI300X is AMD’s flagship for large AI applications and a significant development for the company. It comes in single accelerators and an 8-GPU OCP-compliant board, the Instinct Platform, using Infinity Fabric to connect GPUs and run the ROCm AI software stack.
CEO Su Is Optimistic and Driven About AMD
Lisa Su, AMD’s CEO, is determined to establish AMD as a leader in the AI processor market, challenging Nvidia’s 85% market share. The MI300 line is pivotal in AMD’s quest to excel in inference solutions, which involve using pre-trained AI models for data analysis.
AMD aims to overcome the perception that Nvidia processors are more AI-friendly, with some companies, like Lamini, finding AMD’s ROCm software comparable to Nvidia’s CUDA.
AMD and Microsoft’s Collaboration
Microsoft’s (NASDAQ:MSFT) CTO, Kevin Scott, expressed praise for AMD’s GPU chips, foreseeing their growing importance in the market. These comments boosted AMD’s shares by nearly 5%. While facing competition from Nvidia, AMD could seize opportunities, especially considering Nvidia’s antitrust scrutiny in France.
AMD is strengthening ties with Microsoft, which has invested heavily in AI and integrated such technologies into Bing. After Microsoft’s CTO praised AMD at the Code Conference, AMD’s stock surged by nearly 5%. Microsoft has utilized AMD chips in various units and may be working with AMD on a custom AI chip, although no official confirmation or product has surfaced.
AMD is Resilient
AMD stock has consistently been a strong investment, surging 65% year-to-date, 83% in the past year, and 301% in five years. With their AI efforts and competitive edge, AMD’s growth outlook remains bright, making it a recommended buy.
There’s a reason why insiders remain optimistic about AMD’s future in AI processors. I think as more emphasis is placed on the importance of software and investment in AI initiatives for leadership in inference solutions, AMD should benefit.
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.