AMD Stock Soars 9% on Stellar Earnings and AI Chip Forecast

The stock of Advanced Micro Devices (AMD), a notable player in the artificial intelligence chip industry, has seen a significant rise, closing up by more than 9% on Wednesday. This surge followed the company’s announcement of its optimistic 2024 forecast for its AI chip business, which came on the heels of its top and bottom-line earnings estimates surpassing expectations.

AMD reported adjusted earnings per share of 70 cents, marginally exceeding the London Stock Exchange Group’s (LSEG) estimate of 68 cents per share. Revenue also had a modest beat at $5.8 billion against the anticipated $5.7 billion.

A key factor that ignited Wall Street’s enthusiasm was a statement by AMD’s CEO, Lisa Su. She revealed that the company anticipates GPU revenue to reach approximately $400 million in the fourth quarter, with projections to exceed $2 billion by 2024. This forecast triggered a positive turnaround in the stock, culminating in Wednesday’s rally.

Analysts from Wall Street hold a positive outlook towards AMD’s potential in the AI market. While Nvidia currently dominates this sector, AMD is among the few companies with the capability to manufacture high-powered graphics processing units (GPUs) that power AI models.

The Bank of America analysts noted, “The upcoming MI300 accelerator is expected to generate $400 million in sales in Q4 and over $2 billion in 2024. We’re seeing healthy traction across hyperscalers, enterprises, OEMs, and AI startups.”

AMD confirmed that their new MI300A and MI300X GPUs are set for mass production during this year’s fourth quarter. Despite lowering their price target from $145 to $125, analysts at Raymond James maintained AMD as a “strong buy”, primarily due to its AI business. They stated, “While we’re reducing our estimates, we continue to like the story due to long-term AI/ML potential. We see no reason why AMD can’t capture 10–20% share of the $100B+ AI accelerator market in the long term.”

Jeffries analysts echoed a similar sentiment regarding AMD’s GPU business. They wrote, “Perhaps the most encouraging news from the earnings call was that AMD now anticipates its datacenter GPU family (MI300) to ship for $2 billion in revenues in 2024. This starts at $400 million in both Q4 2023 (HPC) and in Q1 2024 (inferencing + training).”

The latest AI news is undoubtedly exciting for those keeping tabs on artificial intelligence generated images and AI text generator technologies. As AMD continues to innovate and push boundaries, it’s clear that the company is making significant strides in the AI industry. The rise in AMD’s stock is a testament to the potential of AI tools and their growing influence on the market.

The AI video generator market, in particular, is set to benefit from advancements in GPU technology. As AMD continues to develop high-powered GPUs, we can expect a significant impact on the quality and efficiency of AI video generators, AI images generators, and other AI tools.

In conclusion, AMD’s positive forecast for its AI chip business is a promising sign not just for the company, but for the entire AI industry. As AMD continues to innovate and grow within this market, we can look forward to more advancements in artificial intelligence generated images, AI text generators, and other AI tools. The rise in AMD’s stock serves as a testament to the potential of artificial intelligence and its growing influence on the market.