Chipmaker Advanced Micro Devices Inc (NASDAQ:AMD, ETR:AMD), aka Nvidia Corp’s distant competitor in the GPU space, is expected to soar more than 9% when Nasdaq trading commences on Wednesday.
The bullish price action follows the Santa Clara-based fabless microchip maker’s stronger-than-expected second-quarter earnings, where adjusted operating income knocked above market forecasts of $1.25 billion to touch $1.26 billion.
What is perhaps more relevant, though, is the product mix that culminated in AMD’s comfortable earnings beat.
As evidenced by Microsoft Corp's (NASDAQ:MSFT) negative market reaction to its earnings, the market is seeking instant gratification in artificial intelligence-led sales growth.
For Microsoft, that meant a tepid reaction given the slight miss in Azure cloud-computing revenues.
The opposite appears to be true with AMD.
AMD has undeniably been playing catch-up in the AI compute space given Nvidia’s resounding dominance in the field (due in no small part to Nvidia’s landmark collaboration with ChatGPT developer OpenAI).
But with AMD ramping up shipments of its AI-focused ‘AMD Instinct’ chip range, including the flagship MI300X cloud-computing accelerators, perhaps Nvidia has a genuine competitor nipping at its heels after all.
MI300 sales exceeded $1 billion in AMD’s second quarter, which Wedbush analysts nonchalantly said was “somewhat ahead of our expectations heading into earnings”.
AMD is now guiding towards $4.5 billion worth of full-year AI chip sales, a cool half a billion up from previous guidance.
This is music to Wedbush’s ears.
“We believe AMD's rapid growth… in sales and solid outlook very much supports our thesis that AMD has emerged as the clearest contender to Nvidia in supplying AI GPUs/accelerators,” said the investment firm.
According to Wedbush, “there is significant appetite for an Nvidia alternative, creating room for AMD to meet or surpass our expectations for next year”.
Those expectations are guiding towards a 10% market share of the AI computing industry, which is no small achievement for a company competing with the behemoth that is Nvidia.