AMD Gains Momentum With AI: Can It Beat Expectations?

Advanced Micro Devices (NASDAQ: AMD) is gaining traction with AI. NVIDIA remains the leader because of its first-mover advantage, but there are other significant players, and AMD is the leader. While NVIDIA commands an estimated 95% of the AI data center market, AMD carries most of the remainder and can regain the share lost due to NVIDIA's boom. That's worth more than 1000 basis points in market share growth on top of robust organic industry growth to drive revenue, earnings, and shareholder value. Industry growth is still accelerating. AMD CEO Lisu Su upped her estimates at the investor day event, expecting a 60% CAGR over the next five years. 

Aside from company commentary, there is solid evidence of the demand for AMD AI-oriented chips. Companies from Hewlett Packard Enterprises (NYSE: HPE) to Meta Platforms (NASDAQ: META) and Oracle (NYSE: ORCL) are using large quantities of them to build out enterprise-quality HPC applications requiring the lowest latency. Oracle's news includes a supercluster that can link over 16,000 MI300Xs, using a suite of tools provided by AMD to operate them. Hewlett Packard Enterprise will package eight MI325X and two EPYC CPUs into its latest servers, the HPE Proliant XD685, for AI service providers and large model builders.

The suite of tools is critical to AMD's success; the ROCm suite is comparable to NVIDIA's CUDA, allowing programmers to ...