Creating artificial intelligence (AI) applications hinges on data centers and potent graphics processing units (GPUs) harbored within. Over the past 18 months, Nvidia (NASDAQ: NVDA) has reigned supreme in the GPU realm, commanding up to a staggering 98% of the market share.
Anticipated rivalry has finally surfaced, and Advanced Micro Devices (NASDAQ: AMD) has seized the initiative by mapping out an intriguing GPU future. Lisa Su, the company’s CEO, took center stage at the “Advancing AI” event on Oct. 10, delivering insights on their next-gen chips.
Image source: Getty Images.
Revelation: Advanced Micro Devices Plays Catch-Up in the AI GPU Race
Heftily shaping the benchmarks for AI training and inference, Nvidia’s H100 GPU took the lead. Though the chip commenced full-scale production in September 2022, widespread sales only kicked off in 2023 amid a fervent AI wave engulfing the tech arena. Even to date, the H100 remains a coveted item, with Nvidia wrestling supply limitations attributed to soaring demand from industry stalwarts like OpenAI, Amazon, Microsoft, and others.
These supply hurdles opened windows for competitors like Advanced Micro Devices to wrest a slice of the pie. Notably, the company introduced its data center GPU, the MI300X, towards the end of 2023, designed squarely to rival the H100. Evidently, it managed to lure some of Nvidia’s premier clients such as Microsoft, Oracle, and Meta Platforms.
Impressively, Advanced Micro Devices affirms that a few of these clientele experienced enhanced performance and cost-efficiency with the MI300X, compared to the H100. Despite trailing by over a year in the launch timeline, the contender produced a commendable product, forecasting a record GPU revenue of $4.5 billion in 2024 — an estimate revised upwards twice.
However, Nvidia maintains an edge by ushering in the H200 GPU earlier in the year, boasting nearly twice the AI inference pace of the H100. This advancement positioned Advanced Micro Devices a step behind. Yet, at the Advancing AI event, Lisa Su revealed fresh insights on their latest MI325X, outshining the H200 with 80% more high-bandwidth memory and 30% superior inference performance.
Albeit promising, the MI325X isn’t slated for shipment until the first quarter of 2025. The chase to close the gap persists, with Nvidia now honing in on the Blackwell chip architecture, poised to deliver an unprecedented performance leap. The new GB200 NVL72 system is set to outpace AI inference at a remarkable 30x speed compared to the equivalent H100 system, boasting cost-efficiency akin to the H100’s initial launch prices. Hence, Blackwell promises a substantial improvement in cost-effectiveness vis-a-vis the rival offerings by Advanced Micro Devices.
To recap, while Advanced Micro Device’s MI325X might outclass the H200, it shall lag significantly behind Nvidia’s freshest hardware.
Anticipation: Advanced Micro Devices’ Blackwell Challenger Nearing Debut
Disclosing exciting prospects, Lisa Su unveiled plans for yet another GPU — the MI350X — slated to hit the markets next year. Based on their new CDNA 4 architecture, it boasts a monumental performance leap of 35x relative to CDNA 3 chips like the original MI300X.
Advanced Micro Devices has explicitly outlined that the MI350X stands poised to rival Nvidia’s Blackwell chips. While Nvidia prepares to amplify Blackwell GPU shipments during its 2025 fiscal Q4, Advanced Micro Devices intends to commence MI350X shipments in the latter’s 2025 calendar’s second half. After trailing Nvidia by over a year with the MI300X, Advanced Micro Devices stands on the cusp of narrowing the gap to mere months with the MI350X.
Impending Financial Report: Advanced Micro Devices Teases Growing GPU Sales
The company might furnish further details on their new chips during the impending release of their Q3 2024 financial outcomes (ending Sept. 30), scheduled around Oct. 29.
In the second quarter, Advanced Micro Devices demonstrated robust performance by generating a monumental $2.8 billion in data center revenue, reflecting a 114% surge from the corresponding period last year. Another robust showing could propel management to augment their full-year GPU sales targets.
Unlocking Investment Potential in Advanced Micro Devices Stock: A Forecast Beyond $4.5 Billion
Advanced Micro Devices is on a trajectory that may see its revenue soar beyond the $4.5 billion mark. Investors are eyeing the company’s promising outlook with anticipation; there’s a palpable buzz in the financial world. Like a seasoned sailor reading the wind for a successful journey, AMD seems destined for financial horizons untouched before.
Looking Beyond the Surface: A Price-to-Earnings Comparison
Currently, Advanced Micro Devices stock is trading with a hefty price-to-earnings ratio of 200.3, owing to its modest earnings per share of $0.82 over the past four quarters. For perspective, the Nasdaq-100 technology index trades at a P/E of 32.1. It’s as though the market sees AMD as a diamond in the rough, waiting to be fully realized.
But analysts are painting a different picture for the future. By projecting an EPS of $5.43 in 2025, they estimate a more reasonable forward P/E of 30.6. It’s akin to a caterpillar undergoing metamorphosis into a butterfly, shedding its valuation constraints to reveal its true potential.
Poised for Success: Key Product Rollouts
The excitement for Advanced Micro Devices doesn’t end there. With the impending launch of MI325X and MI350X in 2025, investors are salivating at the chance to get in early on the action. It’s like being handed a golden ticket to a tech wonderland, where innovation reigns supreme and profits follow suit.
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