Analysts Share Their Insights Following AMD’s AI Event

AMD has announced plans to commence mass production of its new MI325X AI chip in the fourth quarter of the year, aiming to strengthen its presence in a market largely dominated by Nvidia. At a recent event in San Francisco, CEO Lisa Su revealed that the next-generation MI350 chips are set to launch in the latter half of 2025. These new chips will offer enhanced memory capabilities and a redesigned architecture intended to significantly improve performance compared to the MI300X and MI250X models.

Despite these announcements being in line with earlier expectations, AMD’s stock saw a 4% decline as investors expressed concerns over the absence of significant cloud-computing partners. In contrast, Nvidia’s shares increased by 1.6%, while Intel experienced a 1% drop.

AMD has confirmed that partners, including Super Micro Computer, will begin shipping the MI325X AI chip in early 2025. This chip retains the architecture of the MI300X but introduces a new memory type aimed at expediting AI computations. The chipmaker, based in Santa Clara, California, is set to compete with Nvidia’s Blackwell architecture using the MI325X.

In addition to the AI chips, AMD announced new networking chips for data centers and three new laptop processors based on the Zen 5 architecture, which are optimized for AI functionalities. These laptop processors will also be compatible with Microsoft’s Copilot+ software.

Su reiterated that AMD will continue its collaboration with TSMC in Taiwan for advanced chip manufacturing.

Analysts’ Reactions to AMD’s AI Event

Bernstein: The firm noted a typical sell-off post-announcement, highlighting some excitement leading up to the event but a lack of major surprises. They perceived the MI325X performance specifications as somewhat underwhelming compared to Nvidia’s upcoming Blackwell launch, leading them to prefer Nvidia stock at this time.

Deutsche Bank: They viewed the event as a continuation of AMD’s successful execution in delivering high-quality data center innovations. The firm noted an increase in the addressable market for accelerators from $400 billion in 2027 to $500 billion in 2028, reflecting confidence in the potential for growth and market share expansion.

Bank of America: The analysts stated that the MI325X performance lags by approximately a year behind Nvidia’s Blackwell. However, they emphasized that AMD’s growth opportunities across data center CPUs and GPUs remain intact, suggesting a significant market opportunity ahead.

Truist Securities: Their analysis suggested that the development is more of an evolutionary step rather than a groundbreaking shift. They expressed long-term concerns about AMD’s competitive positioning in the AI space compared to Nvidia’s comprehensive solutions and anticipated pressure in the x86 market from emerging CPU competitors. They maintained their price target and rating.

Morgan Stanley: The firm acknowledged AMD’s introduction of the Zen 5 server architecture and preview of the MI350. They found the potential leadership position from MI350 compelling but indicated that the MI300 may not deliver as much upside in the interim compared to other AI opportunities.

Overall, while AMD’s announcements underscore its strategic efforts in the AI sector, reactions indicate a cautious outlook from analysts, particularly regarding competition and market positioning.