AMD Raises AI Chip Sales Forecast Amid Supply Shortages 🚀
Advanced Micro Devices (AMD) announced an increase in its 2024 forecast for artificial intelligence (AI) chip sales, adding $500 million to its projection. The company anticipates tight supplies until 2025. This news caused AMD’s stock to rise by 7.5% in extended trading.
AI chips produced by AMD are mainly purchased by major players in cloud computing. Industry experts and Wall Street analysts see AMD as one of the few companies capable of challenging Nvidia’s dominant position in the market. Following the announcement, Nvidia’s shares increased by 4.7%.
AMD’s Customer Base and Strategic Moves
- AMD serves Meta Platforms and collaborated with Microsoft to provide access to a cluster of AI chips through its cloud platform earlier this year.
Surging Demand and Revenue Boost
- Due to increasing demand, AMD raised its 2024 AI chip revenue forecast to $4.5 billion from $4 billion. CEO Lisa Su mentioned that the supply of these chips will remain constrained until 2025.
- In Q2, AMD’s data center revenue, the company’s largest segment, surged by 115% to $2.8 billion, slightly exceeding expectations.
- For the first time, AMD’s quarterly AI chip revenue, primarily concentrated in the data center sector, exceeded $1 billion.
The “Picks and Shovels” Cycle
- Analysts compare the current AI hardware infrastructure phase to the California gold rush’s picks and shovels era, highlighting the profitability of hardware suppliers over miners.
- Many enterprises are investing in AI software for trial and pilot programs rather than full deployment, indicating a gradual uptake of AI technologies.
Despite significant investments, the returns from AI spending have yet to materialize. Microsoft’s shares fell by 6% as its cloud-computing growth missed expectations, suggesting that major tech firms may take longer to benefit from substantial AI investments. The rebound in the PC market has also contributed to AMD’s success.
Hot Take: AMD Positioned for Growth in AI Chip Market 🌟
AMD’s strategic moves, revenue forecasts, and tight supply projections indicate a strong position in the AI chip market. With soaring demand and key customer partnerships, AMD is poised for significant growth in the coming years. Stay tuned for more updates on AMD’s advancement in AI technology!
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