Advanced Micro Devices Inc. (AMD, Financial) experienced its largest stock drop in over a month after unveiling a new artificial intelligence (AI) chip, without providing the detailed customer or financial information investors anticipated. The stock decreased by 4% to $164.18, marking the steepest single-day decline since early September, although it has still gained 11% this year.
During an event in San Francisco, AMD's CEO Lisa Su introduced new products, positioning AMD as a significant competitor to NVIDIA in the lucrative AI processor market. The CEO claimed that their latest chip, the MI325X, outperforms NVIDIA's H100 in certain aspects, specifically in a process known as inference. This improvement is attributed to a novel type of memory chip incorporated in the MI325X.
Based in Santa Clara, California, AMD aims to challenge NVIDIA's dominance in AI accelerator chips, which are essential for AI system development. Both companies have committed to annual releases of new accelerators to further drive innovation. Despite these efforts, catching up to NVIDIA remains a challenge for AMD, and Wall Street continues to monitor its progress, likely awaiting the company's quarterly earnings report expected around the end of the month.
The company has set an ambitious revenue target of $4.5 billion for this new chip, indicating rapid growth. Su projected that the total market for these chips will reach $400 billion by 2027, with expectations for the figure to rise to $500 billion by 2028.
Additionally, Su announced plans for a new line of server processors based on AMD's "Turin" technology, aiming to challenge Intel's dominance in the market. The upcoming computers will feature AMD's fifth-generation EPYC processors, boasting up to 192 cores, significantly outperforming Intel's latest offerings. Currently, AMD holds a 34% share of the revenue in this chip market, where Intel previously had up to a 99% share.
