Is Nvidia (NASDAQ:NVDA) the only artificial intelligence (AI) chipmaker that investors should consider in 2023 and 2024? It might seem that way sometimes, but don’t ignore Advanced Micro Devices (NASDAQ:AMD). I am bullish on AMD stock because the company just released a slew of announcements to remind everyone that Nvidia has some fierce competition.
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Advanced Micro Devices, commonly referred to as AMD, is a well-known supplier of microprocessors. Earlier this year, AMD stock rallied sharply, and the company’s chief executive officer, Lisa Su, was heralded as a brilliant leader.
Then, suddenly, the machine-learning revolution dominated the financial headlines. Nvidia became a darling of the markets for its AI processors, and AMD looked like a second-class AI chipmaker in comparison. Now, however, the tables are turning in AMD’s favor. Su is back in the headlines, reminding investors of her company’s strong standing as a tech-industry powerhouse.
Advanced Micro Devices’ Triple-Shot of Announcements
Why did AMD stock shoot higher today? It wasn’t just luck, as Advanced Micro Devices released not just one but three separate press releases on Wednesday afternoon.
Surely, it’s not a mere coincidence that all three of the press releases involved AI. It seems that AMD is taking aim at its rival, Nvidia.
Here’s the rundown. First, AMD showcased 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 during the past few years, but maybe AMD expects a recovery in this area due to the popularity of AI.
Next, AMD delivered the details of its Ryzen 8040 Series processors. The company emphasized this processor lineup’s utility for content creators and video-game players. Moreover, 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.”
On top of all that, AMD introduced two different hardware models with AI functionalities. The Instinct MI300X accelerators provide “industry leading memory bandwidth for generative AI and leadership performance for large language model (LLM) training and inferencing.” In addition, the Instinct MI300A accelerated processing unit (APU) delivers “breakthrough performance” for high-performance computing (HPC) and “AI workloads.”
Lisa Su’s “Eye-Popping” Forecast
These announcements are exciting, and they support the argument that Advanced Micro Devices could catch up to Nvidia in the AI processor market. Yet, the most intriguing statement came from AMD’s famous CEO, who delivered a forecast that Bloomberg called “eye-popping.”
I must admit, my eyes did pop when I read Su’s prediction. Per Bloomberg, the AMD chief executive believes that the AI chip industry could exceed “$400 billion in the next four years.” That figure is more than double the forecast that AMD’s management disclosed in August.
Instead of trying to resist the AI processor trend, AMD and Su are choosing to compete directly with Nvidia and aggressively advance AI hardware technology. “The truth is we’re so early… This is not a fad. I believe it,” Su declared.
Additionally, per Reuters, Su confidently claimed that AMD has a “significant” supply of AI chips valued at “well above” $2 billion. Thus, 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 comes in as a Moderate Buy based on 24 Buys and nine Hold ratings assigned by analysts in the past three months. The average Advanced Micro Devices price target is $128.77, implying 0.8% upside potential.
If you’re wondering which analyst you should follow if you want to buy and sell AMD stock, the most profitable analyst covering the stock (on a one-year timeframe) is Gus Richard of Northland Securities, with an average return of 85.87% per rating and a 91% success rate. Click on the image below to learn more.
Conclusion: Should You Consider AMD Stock?
Su came out swinging yesterday, and investors should remember that Nvidia isn’t the only important AI chipmaker in the U.S. Besides, Advanced Micro Devices is releasing new AI-compatible hardware models that could generate significant revenue.
In the final analysis, Nvidia may be an industry leader now, but Advanced Micro Devices is also a worthy contender. Therefore, today’s rally in AMD stock is justified, and I am definitely considering a long position in the shares.
