- It’s the first time that AMD’s quarterly AI chip revenue exceeded $1 billion.
- While enterprises are investing heavily in AI software, most are still in the trial and pilot phases.
OUR TAKE
After AMD announced an increased revenue forecast for AI chip sales, the company’s shares experienced a notable rise. Specifically, AMD’s stock surged by 7.5% in extended trading after the news was released. This indicates strong investor confidence in AMD’s growth prospects in the AI sector. These developments highlight AMD’s strategic positioning in the AI chip market and its response to the growing demand for AI technologies.
-Lia XU, BTW reporter
What happened
Advanced Micro Devices CEO Lisa Su said AMD has increased its forecast for AI chip sales in 2024 by $500 million, now estimated at $4.5 billion in revenue. This company has also indicated that supplies of AI chips will remain tight through 2025. Following AMD’s announcement of an increased revenue forecast for AI chip sales, the company’s stock surged by 7.5% in extended trading.
According to industry insiders and Wall Street, AMD’s line of AI chips is one of the few potentially viable competitors to Nvidia, which dominates the market. After the AMD report, shares of Nvidia rose 4.7%.
Creative Strategies CEO Ben Bajarin said, “Most enterprises are spending on AI software but only to trial and pilot programs, (and have) not fully deploy them yet”. It may take longer for some Big Tech firms to benefit from hefty spending on AI technology.
Also read: AMD to acquire Finnish Silo AI for $665M to boost AI capabilities
Also read: AMD launches new AI chips to challenge leader Nvidia
Why it’s important
AMD’s increased AI chip revenue forecast to $4.5 billion for 2024 highlights the company’s strong positioning in the rapidly growing AI market. This adjustment reflects the surging demand for AI technologies, crucial for maintaining competitiveness against other tech giants like NVIDIA. Revenue growth is essential for attracting investors and boosting shareholder confidence, especially as the company navigates a competitive landscape.
The recovery in the PC market, driven by new AI features, is important for AMD as it is one of the largest providers of PC chips. The forecasted improvement in the PC business can lead to increased sales and revenue, further solidifying AMD’s market presence.
Supply constraints of AI chips underscore the importance of effective supply chain management and the need for AMD to scale production to meet increasing demand.
