Is Nvidia (NASDAQ:NVDA) the only artificial intelligence (AI) chipmaker that investors should consider in 2023 and 2024? It may seem like it sometimes, but don’t ignore Advanced Micro Devices (NASDAQ:AMD). I’m bullish on AMD stock because the company just released a series of announcements to remind everyone that Nvidia has some stiff competition.
Advanced Micro Devices, commonly known as AMD, is a well-known microprocessor supplier. Earlier this year, AMD shares rebounded strongly and the company’s CEO, Lisa Su, was praised as a brilliant leader.
Then suddenly the machine learning revolution dominated the financial headlines. Nvidia became the darling of the market with its AI processors, and AMD looked like a second-rate AI chip maker in comparison. Now, however, the tide is turning in AMD’s favor. Su is back in the headlines, reminding investors of her company’s strong position as a leader in the technology industry.
Triple shot of Advanced Micro Devices announcements
Why did AMD stock skyrocket today? It wasn’t just luck, as Advanced Micro Devices released not one, but three separate press releases on Wednesday afternoon.
It is certainly no coincidence that all three press releases were about AI. It seems that AMD is targeting its rival Nvidia.
Here’s the overview. First, AMD introduced its AI-powered hardware solutions at an industry event called Advancing AI. Interestingly, the press release highlighted AMD’s AI-compatible hardware for personal computers (PCs). The PC market has been weak in recent years, but perhaps AMD is expecting a recovery in this area due to the popularity of AI.
Next, AMD provided the details of its Ryzen 8040 series processors. The company highlighted the utility of this line of processors for content creators and video game players. Additionally, according to AMD, the new Ryzen 9 8945HS processor offers “up to 64% faster video editing and up to 37% faster 3D rendering than the competition” and “gamers can enjoy up to 77% faster gaming performance.”
In addition, AMD presented two different hardware models with AI functionalities. The Instinct MI300X accelerators provide “industry-leading memory bandwidth for generative AI and guidance performance for large language model (LLM) training and inference.” Additionally, the Instinct MI300A Accelerated Processing Unit (APU) delivers “breakthrough performance” for high performance computing (HPC) and “AI workloads.”
Lisa Su’s “eye-popping” prediction
These announcements are exciting and reinforce the argument that Advanced Micro Devices could be joining Nvidia in the AI processor market. However, the most fascinating statement came from the famous CEO of AMD, who made a corresponding forecast Bloomberg described as “obvious”.
I have to admit that my eyes opened when I read Su’s prediction. Per Bloomberg, the AMD boss believes the AI chip industry “could exceed $400 billion in the next four years.” This number is more than double the forecast AMD management announced in August.
Instead of trying to buck the AI processor trend, AMD and Su are choosing to compete directly with Nvidia and aggressively push AI hardware technology. “The truth is, we’re so early… This isn’t a fad. I believe it,” Su explained.
Additionally per ReutersSu confidently claimed that AMD had a “significant” stockpile of AI chips worth “well over” $2 billion. So it sounds like AMD and Su are fully prepared to threaten Nvidia’s dominance in the American AI processor market.
Is AMD Stock a Buy According to Analysts?
On TipRanks, AMD lands a Moderate Buy based on 24 “Buys” and nine “Hold” ratings assigned by analysts over the past three months. The average price target for Advanced Micro Devices is $128.77, representing an upside potential of 0.8%.
If you’re wondering which analyst to follow when buying and selling AMD stock, Northland Securities’ Gus Richard is the most profitable analyst covering the stock (for a period of 85.87%), with an average return of 85.87% one year) covers assessment and a success rate of 91%. Click on the image below to find out more.
Conclusion: Should You Consider AMD Stock?
Su came through yesterday, and investors should keep in mind that Nvidia isn’t the only major AI chip maker in the US. Additionally, Advanced Micro Devices is launching new AI-compatible hardware models that could generate significant revenue.
Ultimately, Nvidia may now be an industry leader, but Advanced Micro Devices is also a worthy competitor. Therefore, today’s rally in AMD stock is justified and I’m definitely considering a long position in the stock.