AMD’s AI Product Event Expected to Be ‘A Fade-the-News Event,’ Analyst Says

AMD is preparing to host its “Advancing AI” event this week, where industry analysts anticipate announcements of new products that could boost sales and positively influence the chipmaker’s stock performance.

However, analysts from Lynx Equity Strategies view the event as a “fade-the-news” scenario. They pointed out that AMD shares have seen a modest rise over the past week due to investor optimism for clarity regarding the MI325X and its subsequent models. Yet, they believe many investors may end up disappointed.

Lynx’s analysts express skepticism about AMD’s capacity to catch up with Nvidia, which continues to hold a dominant position in the market. Despite AMD’s encouraging statements during the MI300X launch nearly a year ago, the company has made little headway in dethroning Nvidia’s strong grip.

According to the analysts, “We do not expect MI325X to change the narrative meaningfully,” suggesting that AMD is likely to “remain a distant second” in comparison to its competitor. While the company is expected to showcase advancements in data center CPUs and AI PC technology, Lynx insists investor focus will center predominantly on the MI-series. They caution that unless AMD can effectively illustrate a significant driver for gaining market share, the stock may revisit its yearly lows.

Following AMD’s presentation at Computex a few months back, there was some optimism surrounding the next-generation data center GPUs, particularly due to the higher HBM density of the MI325X—288GB in contrast to Nvidia’s 141GB on the H200. However, Lynx points out that customer traction has faltered since that time. Despite AMD’s management claiming better benchmark results than Nvidia’s Hopper series, the analysts remain doubtful, suggesting that in real-world applications, MI300X still lags behind Nvidia’s H100.

Lynx further notes that while the HBM density is one crucial aspect, other factors such as the software stack, backplane networking, and power consumption are equally significant. They believe AMD holds high expectations for the MI325X and is increasing its chip-on-wafer-on-substrate capacity in preparation for anticipated demand. The robust guidance for ethernet connectivity from Broadcom in the AI data center market might indicate increasing demand for AMD’s AI servers. Microsoft appears to be a major customer, though the analysts are unsure of who the real game-changers might be.

Adding to the ambiguity, Meta Platforms, which previously supported the MI300X launch, may have reduced its commitment to AMD recently. Lynx speculates that Meta may be solidifying plans for its internally developed silicon as a potential alternative to Nvidia, while doubts linger about whether AMD is seen as a viable choice by other major players such as Amazon.

The firm highlights Oracle as another possible customer showing interest, but cautions that the MI-series and its software may not be the straightforward solution AMD has advertised. “Outside of Microsoft, we do not believe end customers are likely to spend resources to help bridge the gap as it is unclear what would be the payoff,” the analysts commented.

They predict a decline in AMD’s stock following the event, potentially leading to a return to its yearly lows. Regarding any unexpected announcements at the event, Lynx cautions that while there may be new customer reveals involving Amazon or Google, it will likely be limited to external cloud instances.