Advanced Micro Devices (AMD) investors may be right to program their brains for more stock price gains.
Shares of the semiconductor company were up more than 2% in pre-market trading on Wednesday — and the top traded index was Yahoo Finance — according to a Reuters report that Amazon’s cloud arm is considering using AMD’s new AI chips.
An Amazon spokesperson did not respond to Yahoo Finance’s request for comment.
The report comes a day after AMD unveiled its high-powered AI chips dubbed the MI300, which runs counter to Nvidia’s superior chips.
MI300 can provide up to 192GB of memory. The large memory capabilities mean that AMD’s new chip can be implemented in large AI language models, known as “LLMs”.
Winning business from Amazon Web Services would be a huge vote of confidence in AMD’s new offering, suggesting it has a chance of chipping away at chunks of market share from rival Nvidia.
In an exclusive interview on Yahoo Finance Live on Tuesday (video above), AMD President and CEO Dr. Lisa Su expressed optimism about the demand outlook for its AI chips once they start shipping later this year.
“We’re excited,” Su said.
Su added, “We look at the data center. I mean, this is an incredible market. So if you just think about AI chips in the data center, we think this year the market is about $30 billion.” “We think for the next three or four years it’s going to grow over 50% every year. So it’s going to be like a $150 billion market.”
Su declined to disclose the price on the M1300, but said she expects AMD to be able to produce enough chips in 2024 to satisfy any voracious demand.
Investors sent AMD shares down 3.6% on Tuesday amid some disappointment over the lack of details about pricing for the new chips and launch customers.
But Wall Street remains impressed, believing AMD will be a major player in the next wave of artificial intelligence that the likes of Salesforce CEO Marc Benioff proposed to Yahoo Finance this week.
“Although its ecosystem is not as mature as Nvidia’s, AMD is well positioned to be a major beneficiary of secular AI growth trends in the medium term,” Baird analyst Tristan Gera said in a research note.
Jira raised its 2024 EPS estimate on AMD to $5.50 from $4.09. Consensus estimates are around $4.13 per share for 2024, according to Yahoo Finance data.
The analyst maintained an outperform rating on AMD stock.
Brian Suzy He is the Executive Editor of Yahoo Finance. Follow Suzy on Twitter @employee and on linkedin. Tips on the banking crisis? Email brian.sozzi@yahoofinance.com
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