Artificial intelligence (AI) development occurs primarily in large, centralized data centers with powerful graphics processing units (GPUs). Nvidia remains the go-to supplier for these chips, and its H100 GPU was responsible for an impressive 217% increase in the company’s data center revenue during its most recent fiscal year.
However, competition is coming. Advanced micro-systems (NASDAQ:AMD) launched its own line of data center GPUs designed to handle AI workloads, and received strong demand from many of the same customers that fueled Nvidia’s growth. Additionally, AMD took an early lead in another area of the AI chip space that is already yielding incredible financial rewards.
According to The Wall Street JournalA clear majority of Wall Street analysts give AMD stock the highest possible Buy rating, and here’s why investors may want to follow their lead.
AMD chases Nvidia in data centers, but leads in another major area
AMD launched its MI300 series of data center chips last year, available in two configurations. The MI300X is a GPU designed to rival Nvidia’s H100, and the MI300A combines GPU and CPU hardware to create an even more powerful accelerated processing unit (APU).
During a conference call with investors for the first quarter of 2024 (ending March 31), Lisa Su, CEO of AMD, said that more than 100 companies and AI Customers were already deploying the MI300X, including some of Nvidia’s most popular customers like Microsoft, MetaplatformsAnd Oracle.
Su also said that many MI300X customers are seeing superior performance compared to their H100 installations, and while Nvidia is already shipping its new, more advanced H200 GPU, this is a great starting point for AMD to build on. press. The MI300 has already become the fastest growing platform in the company’s history, surpassing $1 billion in sales in just six months.
But AI is quickly making its way to the edge, meaning the computers and devices we use every day will be able to handle some of the workloads typically reserved for data centers. This will lead to a faster and more convenient experience when using generative AI chatbots like ChatGPT to create content, as queries will not have to bounce to and from a centralized infrastructure.
In fact, AMD sees AI as the biggest inflection point for personal computing since the Internet.
AMD’s Ryzen AI chips are the go-to choice for leading desktop and laptop manufacturers like Asus, Acer, DellAnd HP Inc.. In the previous quarter, AMD told investors that it had about a 90% market share in this segment, with millions of computers already shipping with Ryzen AI chips. So while AMD pursues Nvidia in the data center space, it appears to have a head start in the next frontier of AI.
Incredible progress lies beneath the surface of AMD’s modest first-quarter revenue growth
AMD’s first quarter revenue was $5.5 billion, an increase of just 2% from last year, which is not the case. .
