Zhitong
2024.02.23 04:17
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The tipping point of AI is here! It's not that NVIDIA can't afford it, it's that AMD offers better value for money.

The AI tipping point is here! After NVIDIA released its fourth-quarter earnings report, investors have revalued the stock price of its competitor AMD, causing it to rise on Thursday, continuing its upward trend this year. With the new MI300X chip, AMD has become NVIDIA's only true competitor in the field of artificial intelligence chips. Analysts at Huatai Research believe that the MI300X may challenge NVIDIA's dominant position in the market for large language model artificial intelligence. AMD's CEO predicts that the artificial intelligence chip market could reach $400 billion in the next four years, double the previous forecast.

Zhitong App noticed that after NVIDIA released its explosive fourth-quarter earnings report last night, investors have repriced its chip industry competitors. AMD's stock price rose on Thursday, continuing its impressive gains this year.

Under the leadership of CEO Su Zifeng, AMD has become NVIDIA's only true competitor in the global market for artificial intelligence chips with its new MI300X chip.

At the end of last year, the group launched the MI300 series aimed at supporting generative artificial intelligence technology and introduced the next-generation semiconductor Instinct M1300A focused on supercomputing.

Analysts say that the MI300X may challenge NVIDIA's dominance in the large language model artificial intelligence market with the H100 graphics processing unit chip.

Purdy Ho, an analyst at Huatai Research, said, "We believe that AMD's MI300 is one of the most capable products to challenge NVIDIA." It is worth noting that Lamini AI has announced the use of MI300 and plans to use it for training large models.

He added, "Tech giants such as Microsoft, Meta, and Oracle have also committed to using the MI300 series."

Last month, AMD stated that the new chip could generate sales of around $3.5 billion in the coming year as the group leverages its new products to compete with NVIDIA and meet the surging global demand.

AMD: The artificial intelligence market may reach $400 billion

AMD's CEO stated that the artificial intelligence chip market could reach $400 billion in the next four years, doubling Su Zifeng's forecast from August last year, marking a significant upgrade from previous predictions.

Mark Papermaster, AMD's Chief Technology Officer, said earlier this week at an event, "When we think about $400 billion, this is an accelerator (potential market). You can think of it as a new expansion when the internet was just launched, you need a complete expansion, not just computing, but also networking, infrastructure, and more. This is a new platform."

However, to meet the surging demand, AMD's production capacity is already tight, although Su Zifeng told investors last month that AMD has "made significant progress with supply chain partners and has obtained additional capacity to support the upward demand."

While this statement does not directly mention its larger competitors, it does highlight one of the main obstacles NVIDIA has faced recently.

Chip-on-wafer-on-substrate (coos) is a key component of artificial intelligence chip manufacturing. For most of the past year, it has been dragging down NVIDIA's deliveries.

The world's largest chip contract manufacturer, TSMC, has been working hard to meet the increasing demand for its high-end stacking and packaging technology and has warned investors that "this situation may continue into next year."

Supply Chain Issues Cast a Shadow on NVIDIA

NVIDIA has stated that it expects its next-generation chips, including the high-priced B100 Blackwell, to be "in short supply" in the near term.

NVIDIA CEO Jensen Huang told investors during a conference call later on Wednesday, "We expect demand to continue to outstrip our supply this year, and we will do our best." "The cycle is improving, and we will continue to do our best."

NVIDIA also mentioned that it will launch the H20 chip later this year to comply with new export regulations.

NVIDIA's dominant position in the broader artificial intelligence chip market is unlikely to be challenged by AMD in the coming year or even longer. However, as companies (and more governments) seek to harness the potential of artificial intelligence technology, they will look for new sources of GPUs to avoid being pushed back in line behind other high-paying customers.

This could significantly accelerate AMD's recent growth rate.

FOMO May Boost AMD Sales

CFRA analyst Angelo Zino stated in a recent client report, "As AMD rolls out its MI300x to cloud providers, we are encouraged by the prospects for data centers (graphics processing units)." "We believe expectations for GPUs are conservative, with upside potential in 2024 and 2025."

Zino added that AMD will soon introduce a new Zen 5 chip for the personal computer market, enabling them to directly handle artificial intelligence tasks on laptops.

AMD's stock is also cheaper than NVIDIA's, with an expected P/E ratio of 44 times (NVIDIA's expected P/E ratio is 57 times), but this also reflects NVIDIA's much faster sales growth and higher overall profit margin.

Nevertheless, AMD's stock has risen by 65%, while NVIDIA's stock has risen by 152%. In May last year, NVIDIA released a stunning first-quarter earnings report, effectively kicking off the global artificial intelligence investment race.

KeyBanc Capital Markets analyst John Vinh stated, "We believe in AMD's revitalized product roadmap strategy, with its product appeal being convincing." He rates AMD stock as overweight with a target price of $270.

"However, the market has high expectations for stock price increases and growth. We are concerned that any moderate decline based on valuation levels well above peers could pose significant risks to the stock."