AMD’s (Advanced Micro Devices) forecast for Ai chip sales did not impress investors, and the company stock took a dip by 7% in extended trading hours.
AMD expects to sell $4 billion worth of AI chips
AMD expects to sell AI silicon chips worth $4 billion roughly in 2024, which is more than its previous estimate of $500 million, said Lisa Su, AMD chief executive officer, when talking to analysts.
As we know, the processor maker Nvidia has been constantly beating investor expectations because of the increasing demand for silicon chips from AI. The increase of half a billion dollars was still short of Wall Street’s ambitious targets for semiconductor sales.
Reuters quoted the CEO of market research consultant Creative Strategies, Ben Bajarin, saying,
“I think investors wanted to see a stronger demand pipeline from AI-related products, but it is a slower ramp for them against Nvidia, and perhaps they aren’t making as much progress as the street hopes.”
The market is shifting towards AI-based servers
Companies are now spending more on AI-based server semiconductors so that they can swiftly adopt generative AI, and this has decreased demand for traditional server chips as these processors cannot process the complex tasks that AI requires, and these processors are a key component of AMD’s sales revenue. AMD CEO said,
“Overall AI demand has exceeded anyone’s expectations in 2024.”
Source: Reuters.
While some of the central processing units (CPUs) of AMD are usable in combination with AI processors, the ratio has decreased for their usability due to specialized AI processors vs. traditional CPUs.
AMD is the second-largest server processor maker after Nvidia, which holds about 80% of the expanding market for server processors related to AI. Nvidia shares slipped 2.3% in extended trading on the same day, while last week they saw a 15% increase in just five trading sessions, which set off a rally on Wall Street.
Lisa Su said that it had sold AI chips worth $1 billion since its launch back in the fourth quarter of the previous year and noted that Meta, Microsoft,and Oracle use its MI300X accelerators.
While the gaming segment remained the worst performer, AMD said that demand for chips for game consoles and PCs was less, so the revenue for gaming went down to $969 million. But at the same time, AMD’s data center business improved by 80% and reported $2.3 billion in sales.
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