- AMD reported Tuesday that its income rose 18% from the identical time final yr.
- AMD goals to shut the hole with Nvidia, which holds 80% of the GPU market.
During Advanced Micro Devices’ third quarter earnings name on Tuesday, CEO Lisa Su mentioned that the corporate has “closed a superb a part of the hole” with its AI rival, Nvidia.
AMD nonetheless has a big hole with Nvidia, because it lags behind in GPUs or graphics processing items. These items are closely utilized in coaching AI resulting from their potential to course of giant datasets. Nvidia holds greater than 80% of the market.
AMD reported income growing 18% yr over yr in its third quarter, primarily resulting from information middle gross sales and a rise in Instinct GPU and EPYC CPU gross sales.
At the identical time, analysts raised considerations in regards to the delay in AMD’s GPU choices. Earlier this month, AMD introduced that its new era MI325X accelerator chip will start manufacturing shipments later this yr and extra widespread potential in early 2025. It additionally plans to launch MI350 subsequent yr to compete with Nvidia’s extremely anticipated Blackwell chip, which is predicted to begin delivery sooner than AMD within the fourth quarter of 2024.
Although AMD’s earnings carried out across the ranges predicted by Wall Street analysts, inventory costs dipped as a lot as 10% Wednesday, reflecting buyers’ disappointment.
Vivek Arya, a Bank of America Securities analyst, requested on the earnings name about how its chips are “sort of one yr behind the business chief.”
“Can you actually acquire share till that hole is closed?” he requested.
Su responded that AMD’s highway map “really closed a superb a part of that hole” with Nvidia’s merchandise and that AMD holds a bonus in information middle retrofitting.
“I feel MI325 is a superb product. It’s going to compete very properly with H200, and the MI350 sequence will compete very properly with Blackwell,” Su mentioned on the decision.
When requested by Piper Sandler semiconductor analyst Harsh Kumar about what’s hindering AMD from turning into an even bigger GPU market participant in comparison with Nvidia, Su mentioned that buying the full addressable market takes time. Developing chips with extra processing capability can even take years of design and testing.
“We’ve had an especially good product even again within the ROM days,” Su mentioned. “But it does take time to make sure that belief is constructed, there’s familiarity with the product.”
Analysts mentioned that whereas AMD bought a later begin in GPUs than Nvidia, it’s nonetheless slowly chipping away at its floor within the AI growth.
“As a lot as we nonetheless consider NVDA shall be laborious to shake from its 80-85% AI share, AMD nonetheless has performed an enviable job from just about zero to ~5% market share,” Arya wrote in a be aware launched on Wednesday.
Even if this share stays unchanged, the underlying AI progress will nonetheless present AMD “the prospect to take part,” he added.
Morgan Stanley additionally bumped up its estimates of AMD’s progress for the following quarter to $8 billion, though its analysts raised considerations about buyer utilization. AMD’s prospects embrace Microsoft, Meta, and Google.
“Our checks proceed to point out a number of prospects which can be dedicated to utilizing AMD structure, however precise utilization nonetheless appears comparatively small,” Stanley’s fairness analysts wrote.
