
AMD Faces Investor Skepticism as AI Market Moves Toward Custom Chips
AMD is set to share its fourth-quarter results on Tuesday, Feb. 4 facing opportunities and problems in the fast-changing AI chip market as investors are expected to look closely at AMD's AI strategy. Reuters reports that experts think AMD's revenue will increase by over 22% to $7.53 billion. They expect its data center part to make up more than half of total sales at $4.15 billion. Yet, investors still worry about how AMD stands in the AI race. TD Cowen experts and Omdia believe AMD could sell $10 billion worth of AI chips this year, this is twice what AMD itself thinks it will sell, which is $5 billion. However, the scene is getting more complex with Big Tech firms like Microsoft, Amazon, and Meta making their own special chips for AI work. This move to custom chips, along with NVIDIA's strong market position and its popular CUDA software, makes things tough for AMD. The high costs of switching chipmakers also make it hard for AMD to grow its share of the market, however, the ongoing increase in AI spending by tech giants could help balance out these problems. Investors see "customer silicon and NVIDIA as the AI chip market going forward," said Ryuta Makino, analyst at AMD investor Gabelli Funds.
Supply chain issues make AMD's position more difficult as TSMC is boosting its advanced packaging ability to fix bottlenecks, while NVIDIA's production increase of its new "Blackwell" AI chips might restrict AMD's access to manufacturing resources. Yet, AMD's business has some good news, its personal computer unit should grow by almost 33% to $1.94 billion catching up to Intel.
Supply chain issues make AMD's position more difficult as TSMC is boosting its advanced packaging ability to fix bottlenecks, while NVIDIA's production increase of its new "Blackwell" AI chips might restrict AMD's access to manufacturing resources. Yet, AMD's business has some good news, its personal computer unit should grow by almost 33% to $1.94 billion catching up to Intel.