Advanced Micro Devices Inc. (AMD) witnessed a rebound in its stock on Wednesday as investors showed renewed optimism about the company’s prospects in the artificial intelligence (AI) sector. Despite a downbeat forecast for the first quarter, AMD’s shares recovered as excitement around its new line of AI processors overshadowed short-term revenue concerns. The company now anticipates generating over $3.5 billion from its AI accelerator lineup this year, up from a previous projection of $2 billion, reflecting strong demand for these chips.
CEO Lisa Su expressed confidence in AMD’s new chips during an interview on Bloomberg Television, emphasizing the significant expansion underway in the AI market. Su assured investors that total demand is expected to improve in the latter half of the year, and AMD, which relies on outsourced manufacturing, has secured sufficient supply to surpass the $3.5 billion AI sales target.
“While our current revenue forecast falls short of analyst estimates, we remain optimistic about the long-term prospects of our AI accelerators,” Su stated.
Despite the positive outlook for AI sales, AMD’s overall business remains subdued, with first-quarter revenue projected to be approximately $5.4 billion, falling short of analysts’ expectations. This mirrors similar concerns expressed by rival Intel Corp. regarding softness in the PC and data center chip markets.
The recovery in AMD’s stock price on Wednesday indicates investors’ continued interest in the company’s AI computing capabilities. However, questions remain about whether AMD’s MI300 processors can challenge the dominance of Nvidia Corp. and its H100. Wall Street analysts have varying predictions for AMD’s AI sales, with some expecting figures as high as $8 billion.
Intel, AMD’s competitor in the programmable processor market, has also experienced sluggish demand in this segment. Furthermore, Intel noted weakening demand in the data center processor market in its recent quarterly report.
Despite these challenges, AMD remains a key player in the PC chip market, supplying chips for gaming consoles to companies like Sony Group Corp. and Microsoft Corp. The company’s position as Intel’s largest rival in computer processors further solidifies its presence in the technology industry.
In summary, AMD’s focus on AI sales presents a promising opportunity for growth, despite short-term revenue setbacks in other segments. The company’s ability to capitalize on the expanding AI market will be closely monitored by investors in the coming quarters.
