Announced at 'Analyst Day' on the 11th
"AI Will Drive Most of the Growth"
Challenging Nvidia with Next-Generation AI Chips
Lisa Su, CEO of AMD, is delivering a speech at the Computex Forum held in Taiwan in June 2024. Photo by Reuters Yonhap News
Artificial intelligence (AI) semiconductor company AMD has projected that the global data center chip market will grow to $1 trillion (1,463 trillion won) by 2030. Following its recent multi-billion dollar chip supply contract with OpenAI, which demonstrated AMD’s competitiveness, the company’s additional optimistic outlook was met with enthusiasm in the market.
"Data Centers Are the Biggest Growth Opportunity"
Lisa Su, CEO of AMD, expressed her confidence at the 'Analyst Day' event held in New York on the 11th (local time), stating, "Data centers represent the biggest growth opportunity and the area where AMD holds its strongest position."
She went on to forecast that data center chip sales will reach $100 billion (approximately 146 trillion won) annually within the next five years. She also predicted that profits would more than triple over the same period.
CEO Lisa Su explained, "AI will drive most of this growth," noting that the projection includes not only data center chips but also central processing units (CPUs), networking chips, and AI-specialized chips. She emphasized, "AMD has secured a unique position to lead next-generation AI computing through a broad product portfolio and strategic partnerships."
Jean Hu, Chief Financial Officer (CFO) of AMD, projected that over the next three to five years, the company’s overall business would grow by 35% annually, while the data center segment would expand by 60% each year. During the same period, earnings per share (EPS) are expected to rise to $20, which is about six times this year’s estimate of $3.31.
AMD also announced its intention to continue mergers and acquisitions (M&A) related to AI. CEO Su stated, "AMD has built an M&A machine," and mentioned that the company is actively pursuing such strategies. Previously, AMD acquired server manufacturer ZT Systems and MK1, a software developer for AI application deployment.
Challenging Nvidia’s Dominance
AMD plans to challenge rival Nvidia’s dominance by launching its next-generation AI chip series, the 'MI400,' next year. The company also unveiled a reference design for server racks that integrates CPUs and graphics processing units (GPUs).
Earlier, AMD signed a multi-year contract with OpenAI worth several billion dollars to expand its AI chip supply, and granted OpenAI an option to acquire about a 10% stake in AMD at $0.01 per share if certain conditions are met.
Reuters reported, "While this deal is not enough to immediately shake Nvidia’s market dominance, it is seen as a strong vote of confidence in AMD’s chips," adding, "The optimistic financial outlook announced today is likely to help ease investor concerns about whether the company can increase its market share."
Meanwhile, AMD’s stock closed down 2.7% at $237.52 during regular trading on this day, but rose by about 4% in after-hours trading following the earnings outlook announcement.
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