Advanced Micro Devices (AMD) has attracted attention from Wall Street analysts due to its potential to compete against Nvidia in the artificial intelligence (AI) semiconductor market. Although opinions on AMD’s outlook vary, the company recently reported solid earnings, boosting its stock price. Despite providing guidance that fell below expectations, investors are optimistic about AMD’s future in AI chips.
The success of AMD’s upcoming MI300X chip, slated for release in Q4 of this year, will play a crucial role in shaping the narrative around the company. This chip aims to challenge Nvidia’s graphics-processing units and gain market share in powering AI technology.
KeyBanc analyst John Vinh is confident in AMD’s prospects, anticipating a significant increase in MI300X deliveries next year and around $2 billion in GPU revenue. In a research note, Vinh expressed his belief in AMD’s product roadmap strategy and highlighted the strong traction its products are gaining. However, he also acknowledged the high expectations for share gains and growth.
Vinh has maintained a target price of $160 for AMD, along with an Overweight rating on the stock. Pre-market trading on Wednesday saw AMD shares dip 0.5% to $117.02, following a 2.8% increase the previous day.
During an earnings call, AMD CEO Lisa Su stated her belief that there will be “multiple winners” in the AI chip race. She also emphasized the company’s investment in software capabilities, which currently gives Nvidia a competitive edge.
Analysts generally anticipate that Nvidia will remain the dominant player in the AI chip market for years to come, despite a potential decrease in its market share from the current level of around 90%. Meanwhile, AMD is expected to secure second place ahead of Intel.
Oppenheimer analyst Rick Schafer expressed skepticism about AMD’s ability to gain significant AI market share against Nvidia’s leading A100/H100 accelerators and software ecosystem. Schafer noted that while AMD has highlighted a multibillion-dollar opportunity in AI, it has not provided specific details about winning over major customers. He predicts that AMD’s GPU share will be limited to the low end of the market.
Schafer maintained a Perform rating on AMD stock without assigning a target price.