Written by Max A. Cherny
SAN FRANCISCO (Reuters) – Advanced Micro Devices said on Thursday it plans to begin mass production of a new version of its artificial intelligence chip called the MI325X in the fourth quarter of the year, as it seeks to bolster its presence in a market dominated by the market. By Nvidia (NASDAQ:).
At an event in San Francisco, AMD (NASDAQ:) also said it plans to release its next-generation MI350 series chips in the second half of 2025. These chips include an increased amount of memory and will boast a new core architecture developed by the company that it said will significantly improve performance. Compared to previous MI300X and MI250X chips.
But that failed to cheer investors who pushed AMD shares down nearly 5% in afternoon trading, with some analysts attributing the drop to an absence of announced new customers for the chips.
Shares of rival Nvidia rose 1.2% while Intel (NASDAQ:) shares fell 1.3%.
Demand for AI processors from big tech companies like Microsoft (NASDAQ:) and Meta Platforms (NASDAQ:) has been far outstripping supply from Nvidia and AMD, allowing the semiconductor companies to sell as much of their production as possible.
This has led to a massive rally in chip stocks over the past two years, with AMD shares up about 30% since their recent lows in early August.
“No new clients have been announced yet,” said Kenjai Chan, a research analyst at Summit Insights, adding that the stock had risen ahead of the event in anticipation of “something new.”
Santa Clara, California-based AMD said vendors such as Super Micro Computer (NASDAQ:) will begin shipping the MI325X AI chip to customers in the first quarter of 2025. AMD’s design is intended to compete with Nvidia’s Blackwell architecture.
The MI325X chip uses the same architecture as the already available MI300X chip, which AMD launched last year. The new chip includes a new type of memory that AMD said will speed up AI calculations.
“All the announcements and customer testimonials today are a step in the right direction, but Nvidia will likely remain the king of GPUs (artificial intelligence chips),” said Ryan Detrick, chief market strategist at Carson Group.
However, AMD’s next-generation AI chips will likely put more pressure on Intel, which has struggled to deploy a cohesive strategy for AI chips. Intel expects AI chip sales to exceed $500 million in 2024.
New server, computer chips
AMD also revealed several network chipsets that help speed up data transfer between chipsets and systems within data centers.
The company announced the availability of a new version of its server central processing unit (CPU) design. The family of chips formerly codenamed Turin includes a version of one designed to keep graphics processing units (GPUs) fed with data, which will speed up AI processing.
The flagship chip has nearly 200 processing cores and is priced at $14,813. The entire line of processors uses the Zen 5 architecture, which delivers speed gains of up to 37% for advanced AI data processing.
Beyond data center chips, AMD announced three new PC chips aimed at laptops, based on the Zen 5 architecture. The new chips are set to run AI applications and will be able to run Microsoft’s Copilot+ software.
In July, AMD raised its forecast for AI chips to $4.5 billion for this year from its previous target of $4 billion. Demand for MI300X chips has surged due to the mania around building and deploying generative AI products.
This year, analysts expect AMD to report data center revenue of $12.83 billion, according to LSEG estimates. Wall Street expects Nvidia to report data center revenue of $110.36 billion. Data center revenue is a proxy for the AI chips needed to build and run AI applications.
Analysts’ rising earnings expectations kept AMD and Nvidia’s valuations in check despite the stock’s rise. Both companies trade at more than 33 times forward 12-month earnings estimates, compared with 22.3 for the benchmark index.