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Advanced Micro Devices Inc. generally won praise among analysts in the wake of new artificial-intelligence product announcements, but at least one worries that the company is late to the game as it taps a massive market opportunity.
The chip company held a Tuesday event during which it showed off new AI chips, but AMD’s
AMD,
discussion of AI at the event was perhaps “thinner” than expected, in the view of Bernstein analyst Stacy Rasgon, “with little in the way of hard numbers offered” and a timeline that “feels quite delayed relative to the competition” — a reference to Nvidia Corp.
NVDA,
See more: AMD launches new data-center AI chips, software to go up against Nvidia and Intel
The AI opportunity for companies “is still very early,” Rasgon continued, “but AMD’s efforts (even if presumably the best alternative out there) still strike us as somewhat late when going up against a competitor who already has the roadmap, ecosystem, and track record across compute, hardware, software, networking, and application expertise and who is bending the market to their will.”
He reiterated a market perform rating and $80 target price on AMD shares, while noting that even if a $150 billion AI data-center total addressable market materializes by 2027, “it might still be more bullish for Nvidia vs their peer.”
Others were more upbeat, including TD Cowen’s Matthew Ramsey, who said the event “articulated a clear strategy to continue to lead and gain share in server CPUs and highlighted how the company’s diverse portfolio of CPU, GPU, FPGA, and networking assets all under one roof can be customized for many customer workloads including AI inference/training.”
He rated the stock at outperform with a $115 price target.
Ramsay cheered the “close integration of all of these computing blocks (enabled by Infinity Fabric interconnect architecture),” something he said “is critical to making AMD the increasingly obvious choice as the market looks for alternatives to the AI market leader Nvidia.”
Piper Sandler’s Harsh Kumar came away with the sense that AMD “currently has all of the building blocks to address both cloud and enterprise customer needs,” and he liked the company’s strategic emphasis on software.
“Given Nvidia’s moat and strong incumbent position around GPUs, AMD made a special effort to point out its ease of compatibility relative to the competition with a section devoted to software,” Kumar noted. “While often overlooked, we feel that this is critical, as it would be very hard for AMD to replicate the infrastructure that NVDA has developed over the last 10 years. AMD’s strategy rather appears to be focused on allowing ease of transition and taking share through open source models.”
He kept an overweight rating and $150 price target on the stock.
AMD shares closed down 3.6% in Tuesday’s session, though they were tracking toward a rebound Wednesday, up 3.1% in premarket action. A Reuters report said that Amazon.com Inc.’s
AMZN,
AWS cloud-computing business was considering using AMD’s new AI chips.
See more: AMD stock gets a boost as Amazon reportedly considers company’s new AI chip
“While lack of major customer announcements likely disappointed some, we believe AMD is working with multiple tier 1 customers and expect initial AI revenue from MI300 in 4Q23,” wrote Raymond James analyst Srini Pajjuri, referring to the company’s new MI300 product that’s aimed at generative AI workloads.
He left the event with “incremental confidence” in his data-center expectations for the second half of the year, and reiterated a buy rating on AMD shares while boosting his target price to $145 from $110.
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