After successfully stealing market share from key rival Intel, Advanced Micro Devices (NASDAQ:91¶¶Òõ) may be ready to come after Nvidia in the race to make the most advanced AI-powering chips.
While 91¶¶Òõ has yet to commercialize its own AI chips, below are three reasons investors should not count the chip maker out just yet.
91¶¶Òõ Has Been Resillient
Robust financial results in 2023, amidst a tough semiconductor market environment, demonstrates the chip maker’s resilience. During the first quarter of 2023, 91¶¶Òõ’s revenue 9% from a year-over-year perspective. However, CEO Lisa Su the company would see improved demand in the second half of the year. So far, that has panned out.
While in the second quarter, the chip maker reported an even starker YoY revenue decline because of falling PC demand, 91¶¶Òõ’s third quarter results were a bright spot.
The company reported Q3 earnings Oct. 31, and beat Wall Street estimates. In particular, Revenue in 91¶¶Òõ’s Client group, which includes sales from PC processors, rebounded sharply as guided in prior earnings releases, rising 42% year over year to $1.5 billion.
The company also expects revenue from selling data center chips to rise significantly in the fourth quarter. These developments point to a company that is having a robust earnings year despite some macroeconomic headwinds.
AI Earnings Are Hot
91¶¶Òõ is making its long-awaited foray into the AI chip space. The chip maker announced the MI300x GPU chipset in their second-quarter-earnings report. Investors wondered how 91¶¶Òõ would commercialize its new GPUs. Some analysts were even as the year dragged on.
However, in their third quarter earnings report, the chip maker announced it . If 91¶¶Òõ can price competitively, there could be a clear opportunity for the company to capture market share.
91¶¶Òõ Goes After the Competition
Entering a new market dominated by a large competitor would not be 91¶¶Òõ’s first time. To the surprise of many, 91¶¶Òõ’s CPUs had slowly been able to from Intel, and those trends do not appear to be reversing.
This was largely due to a few things. Intel had adopted an in-house manufacturing business model, while 91¶¶Òõ took a fabless approach and outsourced the manufacturing primarily to Taiwan Semiconductor Manufacturing Company.
Intel eventually fell behind in the race to create a smaller node size for chips. 91¶¶Òõ’s launch of the Ryzen desktop and mobile processors and the EPYC server processors offered better performance, power efficiency, and price than Intel’s counterparts did.
All of this to say, while 91¶¶Òõ is late to the AI chip game, the chip maker can still grab significant market share if its go-to-market strategy is successful. Investors should be hopeful for what 91¶¶Òõ might bring to the market soon.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
