AMD Expects $2 Billion in Sales from New AI Chip, Bolstering Company Shares
Chip designer Advanced Micro Devices (AMD) has announced its optimistic forecast of $2 billion in sales by 2024 for its new chip, the MI300X. This chip is specifically aimed at challenging Nvidia’s dominant position in the AI market. The news has provided a much-needed boost for AMD after disappointing Wall Street with its quarterly outlook.
Despite expectations of weak fourth-quarter revenue and gross margins due to a decline in demand for programmable chips in industries such as gaming, AMD is confident in the potential of the MI300X. It is set to target the data center AI chip market, an area currently dominated by Nvidia. The company has already secured commitments from several “large hyperscale customers” who intend to use the MI300X chips.
AMD now expects to generate $400 million in revenue from the MI300X chip in the fourth quarter, surpassing its previous forecast of $300 million. However, the overall performance of the company fell short of Wall Street’s expectations. The decline in demand for programmable chips used in wireless communications, healthcare, and automotive industries had a significant impact.
Another potential hurdle for AMD is the US sanctions on chip exports to Beijing, which may require the company to obtain licenses in order to sell its high-end AI chips in China. Additionally, cuts in capital spending by key customer Meta Platforms could also affect AMD’s growth.
For the current quarter, AMD has projected revenue of approximately $6.1 billion, slightly below analysts’ expectations of $6.37 billion. However, the company’s adjusted revenue in the third quarter rose 4% to $5.8 billion, exceeding estimates of $5.7 billion. While revenue in the data center business remained flat, the client segment, which includes the PC market, saw a 42% increase in sales. On the other hand, revenue in the embedded segment (programmable chips) fell by 5%, and gaming revenue declined by 8%.
Analysts attribute AMD’s outlook to the overall weakness in the programmable chip market and increased competition in the AI chip sector. However, AMD’s CEO, Lisa Su, remains optimistic about the company’s future and its ability to compete with Nvidia. She believes that the MI300X chip, along with ongoing innovations and advancements, will position AMD favorably in the market.
As AMD pursues its goal of challenging Nvidia’s dominance, the success of the MI300X chip will undoubtedly prove crucial to the company’s future growth and profitability.
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