Advanced Micro Devices (AMD) has launched a new artificial intelligence chip that’s aimed squarely at helping the company compete against market leader Nvidia (NVDA).
AMD’s new Instinct MI325X microchip will compete directly against Nvidia’s Blackwell line of chips and processors that are used to run AI applications in data centers. Known as graphics processing units, or GPUs, these chips are the most powerful and advanced when it comes to running AI.
According to AMD, production of the Instinct MI325X microchip will start before year’s end. The company has not revealed pricing information, but its newest AI chip is the successor to its popular MI300X chip that launched in late 2023 and is used by technology companies such as Meta Platforms (META) and Microsoft (MSFT) to run their AI applications and models.
Taking On Nvidia
Management at AMD have made clear that they want to take market share from industry leader Nvidia, which continues to dominate data center GPUs with a 90% market share. AMD estimates that the GPU chip market will be worth $500 billion by 2028. The company has been gaining ground, reporting that its data center sales during the second quarter more than doubled from a year earlier to $2.8 billion.
A successful launch and robust sales of the new data center GPU chip might give AMD stock a boost. While the company’s share price is up 11% this year, its performance badly trails Nvidia, whose stock has gained 173% year-to-date. AMD next reports its quarterly financial results on October 28.
Is AMD Stock a Buy?
Advanced Micro Devices stock has a consensus Strong Buy rating among 31 Wall Street analysts. That rating is based on 25 Buy and six Hold recommendations assigned in the last three months. The average AMD price target of $188.04 implies 14.71% upside from current levels.
