AMD Ups Its AI Sales Forecast

Advanced Micro Devices (AMD) has raised its forecast for artificial intelligence (AI) chip sales to $5 billion by 2025, although the company reported fourth-quarter revenue expectations that fell short of analysts’ predictions.

The announcement was made on Tuesday, leading to a nearly 7% decline in AMD’s stock during after-hours trading, thereby reversing much of the 10% gain achieved earlier in the year. Demand for AI chips, particularly from major players like Microsoft and Meta, continues to outpace supply, creating significant challenges for AMD and its competitors, such as Nvidia, the industry leader with an 80% market share.

CEO Lisa Su emphasized that supply for AI chips is expected to remain limited going into the next year. Notably, revenue from AMD’s data center segment, which includes AI chip sales, rose by 122% to $3.5 billion, showcasing a substantial market engagement amidst growing demand.

Su adjusted the AI chip revenue forecast upward from the previous projection of $4.5 billion made in July. She mentioned that expanding collaborations with tech giants like Microsoft and Oracle, which are actively utilizing MI300X chips for their cloud services, have been pivotal in this growth.

Industry analysts express a general consensus that Nvidia is likely to retain its dominant market position due to its extensive AI ecosystem, which comprises not only hardware but also software solutions like CUDA.

Conclusion

The increasing reliance on AI technology indicates that AMD will need to navigate competitive pressures while fulfilling demand. The company’s projections align with broader industry trends focusing on enhancing AI capabilities in various applications.

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