Opinion: AMD’s AI event lacked a wow factor, but here’s one reason investors should be excited
By
Therese Poletti
Published: Oct. 10, 2024 at 8:17?p.m. ET
Advanced Micro Devices Inc.’s more than two-hour AI event Thursday lacked a major wow factor, as hopes for more new-customer news did not materialize. But there was some news that should excite investors.
AMD (AMD -4.00%) Chief Executive Lisa Su gave a forecast for the global market for AI accelerator chips, saying she expects it to reach more than $500 billion by 2028, a 25% jump from her forecast last year of $400 billion. Last year, that market was about $45 billion, so her projection represented an approximately 60% compounded annual growth rate.
AMD also introduced a range of chips and laid out a future roadmap for its next-generation AI chips and software.
The whopping forecast given by Su would indicate that there is still unprecedented demand for AI accelerators, or the graphics processor units (GPUs), made mostly by Nvidia Corp., as well as AMD and a few others. So far, the bulk of GPUs used in AI data centers are still sold by Nvidia, and AMD has just a fraction of the market. Last quarter, Su said that revenue from its data-center GPUs was on track to exceed $4.5 billion in 2024, up from the $4 billion expected in April.
If the GPU market does indeed grow to the projected levels, more competitors to entrenched leader Nvidia will surely be needed, and AMD is its closest challenger. Intel Corp. also develops accelerator chips, but it is not faring as well in AI as its two rivals.
Morgan Stanley analyst Joe Moore wrote in a note this week, after hosting a non-deal road show with Nvidia CEO Jensen Huang and Chief Financial Officer Colette Kress, that it is still early days for the AI data-center build-out. “Every indication from management is that we are still early in a long-term AI investment cycle,” he wrote in a note Thursday.
Su also trotted out many data-center customers and partners, including Alphabet’s Google Cloud, Oracle Corp., Microsoft Corp. and Meta Platforms Inc., but there were no surprise customer announcements, as some on Wall Street had been hoping. The company also showed off, in conjunction with Microsoft, an AI PC running Copilot Plus that’s aimed at corporate PC users, with features including the ability to find things faster on your PC and live language translations in Teams meetings, though it felt a bit underwhelming.
AMD investors decided the overall event was underwhelming as well, driving the company’s stock down 4%. Su, however, mentioned at the end of the event that Thursday was her 10th anniversary as AMD’s CEO, which should also serve as a reminder to investors of the impressive job she has done to turn around the company. As an example, earlier in the presentation she noted AMD’s revenue share of the x86 server market had jumped to 34% in the second quarter, a market that Intel once dominated with a nearly 98% share at its peak.
While AMD has been slower than Wall Street would like to realize the same massive revenue gains that Nvidia has seen in AI, it is clearly on the right track. Investors might have to learn to be more patient.