AMD AI Chip Targets Nvidia: On Tuesday, chip designer Advanced Micro Devices (AMD) unveiled a bold ambition, forecasting $2 billion in sales by 2024 for a chip poised to take on Nvidia in the competitive artificial intelligence (AI) market. This revelation came as a relief to investors after AMD’s quarterly outlook fell short of expectations.
While the company’s Q4 revenue and gross margins predictions dipped below Wall Street estimates, AMD’s stock initially suffered a 4.6% drop in after-market trading. However, the tide turned when executives disclosed the promising prospects of their new chip designed to rival Nvidia’s dominance in the AI market.
Known as the MI300X, AMD’s upcoming chip has garnered significant interest from “multiple, large hyperscale customers.” This term often refers to tech and cloud computing giants. In August, the company had previously forecasted $300 million in revenue for the chip in Q4, but they now expect $400 million.
The new AI chip has raised hopes for AMD’s future, but challenges persist in other segments. Demand for programmable chips, widely used in industries like wireless communications, healthcare, and automotive, has slowed. Intel, too, recently anticipated a decline in demand from this segment. This slowdown has affected AMD’s Xilinx business, renowned for its high margins.
Also Read: Nvidia Faces Stiff Competition as AMD Aims to Dominate AI with Startup Acquisition
Furthermore, expanding U.S. sanctions on chip exports to China will require AMD to seek licenses for its top-tier AI chips, which it plans to launch in Q4. Also, capital spending cuts by key customer Meta Platforms could weigh on the company.
AMD’s Q4 revenue outlook is approximately $6.1 billion, but the uncertainty hovers at $300 million. Analysts, however, expected revenue to reach $6.37 billion. The adjusted gross margin is projected at 51.5%, slightly below the 52.1% estimate.
In the third quarter, adjusted revenue increased by 4% to reach $5.8 billion, surpassing the $5.7 billion estimated by analysts. Adjusted profits per share were 70 cents, beating analyst predictions of 68 cents.
In terms of business segments, data center revenue remained relatively steady at $1.6 billion in Q3, while the client segment, catering to the PC market, exhibited a 42% rise to $1.5 billion, indicating a resurgence in demand. On the flip side, the embedded segment, housing programmable chips, saw a 5% drop to $1.2 billion, and gaming revenue declined by 8% to $1.5 billion. AMD’s push into the AI market has injected optimism, but it must navigate challenges in other areas to meet its ambitious sales targets.
Our Reader’s Queries
What is the AMD forecast for AI?
According to Bloobmerg, AMD CEO Lisa Su has predicted that the AI chip industry could surpass $400 billion within the next four years. Reuters reports that Su has confirmed AMD’s ample supply of AI chips, which are valued at over $2 billion.
Is AMD going to surpass Nvidia?
Investors seem to have faith in AMD’s ability to compete with Nvidia in the AI chip market, as evidenced by the rise in AMD shares on Thursday. However, AMD’s projection of $2 billion in AI GPU sales by 2024 falls short of market expectations for Nvidia’s AI revenue. Despite this, AMD’s potential to capture a portion of the market is still seen as a positive sign for the company.
Can AMD challenge Nvidia?
The Instinct M1300A, a cutting-edge semiconductor designed for supercomputing, has been revealed. Experts predict that the MI300X could pose a serious threat to Nvidia’s H100 graphics-processing-unit chip in the AI market for large-language-models. With its advanced features and capabilities, the Instinct M1300A is set to revolutionize the industry and pave the way for even more innovative technologies in the future.
Will AMD Ryzen processors be driving AI capabilities?
AMD has recently unveiled new additions to its desktop lineup, catering to the needs of gamers, content creators, and everyday users alike. These products promise top-notch performance and the ability to personalize AI processing, providing users with a premium experience. With these latest offerings, AMD is set to revolutionize the desktop market and take it to new heights.