AMD expects to launch a competitor to its Nvidia AI chip within the fourth quarter, and shares rise

Written by Max A. Cherny and Shafi Mehta

(Reuters) – Superior Micro Units on Tuesday forecast a robust fourth quarter and expects to have AI units that may problem Nvidia chips by then.

Shares are up about 3.5% in after-hours buying and selling.

AMD CEO Lisa Su mentioned that AMD is making ready to extend manufacturing of MI300 AI chips within the fourth quarter. The MI300 AI accelerator chips are designed to compete with the superior H100 chips already being offered by Nvidia, though they’re briefly provide.

Su mentioned buyer curiosity within the firm’s MI300 sequence chips is “very excessive” and that AMD expanded its work with “top-tier cloud service suppliers, giant enterprises and plenty of main AI firms” through the third quarter.

Traders are betting that AMD might sooner or later problem Nvidia within the bull marketplace for superior AI chips when AMD releases a competing product later this yr. AMD did not present an in depth forecast for the total yr, however mentioned it expects gross sales in its information heart enterprise that may comprise MI300 gross sales to be increased in 2023 than whole $6.04 billion in 2022.

Nvidia nonetheless faces provide constraints, leaving room for the AMD chip, mentioned Jenny Hardy, portfolio supervisor at GP Bullhound, which owns Nvidia and AMD shares.

“So, if AMD can ramp up manufacturing and launch these MI300 chips within the fourth quarter, it is going to doubtless see sturdy demand as a result of lots of people cannot get their palms on Nvidia chips. So we assume that AMD can successfully fill a part of that supply-demand hole.” Hardy mentioned.

Within the second quarter, income in AMD’s information heart enterprise fell 11% to $1.32 billion, whereas income within the buyer enterprise fell 54% to $998 million from $2.2 billion a yr in the past.

Analysts mentioned that main cloud gamers equivalent to Microsoft and Google plan to extend spending on information facilities within the second half of the yr and that spending will skew towards AI and infrastructure segments.

Nevertheless, the decline in PC shipments has eased and demand is beginning to present indicators of enchancment.

“Wanting into the third quarter, we count on our information heart and buyer revenues to develop by double-digit sequentially pushed by elevated demand for our EPYC and Ryzen processors, partially offset by declines within the gaming and embedded section,” mentioned AMD Finance President Jan Hu.

The corporate expects income for the present quarter to be about $5.7 billion, plus or minus $300 million. Analysts surveyed by Refinitiv count on income of $5.82 billion.

(Reporting by Shafi Mehta in Bengaluru and Max A.

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