Lisa Su shows an AMD Instinct MI300 chip as she delivers a keynote deal with at CES 2023 in Las Vegas, Nevada, on Jan. 4, 2023.
David Becker | Getty Images
AMD shares rose greater than 8% Tuesday to their highest closing worth since reaching a file in November 2021, on optimism that the corporate’s synthetic intelligence chips will probably be in greater demand from firms corresponding to Microsoft, Google and OpenAI.
Tom O’Malley, an analyst at Barclays, raised his worth goal on AMD to $200 from $120, saying AMD might put up $4 billion in AI chip gross sales this 12 months. O’Malley, who has the equal of a purchase score on the inventory, cited sturdy demand for the MI300, AMD’s highest-end machine studying chip for servers.
KeyBanc analysts additionally elevated their worth goal for AMD to $195 and Nvidia to $740 on Tuesday, because of sturdy demand for AI servers.
AMD closed at $158.74 on Tuesday, roughly 2% under the inventory’s all-time excessive. Nvidia, which has the overwhelming majority of the marketplace for AI chips and was the best-performing inventory within the S&P 500 final 12 months, superior 3% to $563.82.
In late 2023, AMD introduced new server chips for AI to compete with Nvidia’s H100 and A100 GPUs, that are utilized by OpenAI to coach and serve its fashions such because the one on the coronary heart of ChatGPT.
AMD and Nvidia are the 2 main producers of graphics processing items, which had been invented for superior laptop video games, however at the moment are crucial to coach and run AI fashions. As AI functions gained investor consideration over the previous two years, Nvidia has been the first beneficiary as a result of the corporate developed AI software program for its chips greater than 10 years in the past.
“They have built a software layer around their chip that the companies I invest in just can’t get enough of,” Venture capitalist Jim Breyer informed CNBC on Tuesday.
Breyer mentioned he was “pounding the table” for each Nvidia and AMD shares.
Analysts see AMD bettering its AI software program and count on main chip patrons corresponding to cloud suppliers and tech giants to look exhausting at utilizing AMD GPUs.
“We are by no means discounting the lead that NVDA has but we think the desire to have a second source will overwhelm difficulties for the software ecosystem,” O’Malley wrote.
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