AMD Soars as AI Chip Sales Prediction Bodes Well for Rivalry with Nvidia

A smartphone with a displayed AMD logo is placed on a computer motherboard in this illustration taken March 6, 2023. (Reuters)
A smartphone with a displayed AMD logo is placed on a computer motherboard in this illustration taken March 6, 2023. (Reuters)
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AMD Soars as AI Chip Sales Prediction Bodes Well for Rivalry with Nvidia

A smartphone with a displayed AMD logo is placed on a computer motherboard in this illustration taken March 6, 2023. (Reuters)
A smartphone with a displayed AMD logo is placed on a computer motherboard in this illustration taken March 6, 2023. (Reuters)

Shares of Advanced Micro Devices jumped 8% on Wednesday, after an upbeat AI chip sales forecast signaled the company was making progress in its bid to catch up with market leader Nvidia.

The optimism over AI chip sales helped ease worries about a disappointing fourth-quarter forecast and put it on course for market value gains of nearly $13 billion, based on the $106.41 share price.

CEO Lisa Su on Tuesday provided a 2024 sales forecast for the first time for the MI300 chips, designed to compete against the advanced H100 chips sold by Nvidia.

She projected annual sales of more than $2 billion, and raised the chip's current-quarter revenue expectations by $100 million.

That would make the MI300 the fastest product to ramp to $1 billion in sales in AMD's history.

"Hitting this milestone is likely a key first step towards proving AMD is the clear second source to Nvidia in the AI accelerator market," said analysts at TD Cowen.

The CEO also said the MI300 chips had won commitments from "multiple, large hyperscale customers", a term that refers to large tech and cloud computing companies.

AMD's shares have gained 61% this year through last close, but those gains pale in comparison to Nvidia's 184% rally.

Still, the conservative forecast and weakness in several of AMD's markets led at least 18 analysts to cut their price targets on the stock, pushing down the median view to $130, per LSEG data.

"Forecasts were below our prior estimates ... and it's quite possible that such estimates could be conservative," Morningstar analyst Brian Colello said.

While the PC market has been seeing signs of recovery, a weak gaming market and decline in demand for programmable chips used by industries such as wireless communications, healthcare and automotive have been a drag.



US Auto Sales Set to Modestly Rise in First Quarter as Tariffs Signal Bumpy Ride

New vehicles are seen at a parking lot in the Port of Richmond, at the bay of San Francisco, California June 8, 2023. REUTERS/Carlos Barria/File Photo
New vehicles are seen at a parking lot in the Port of Richmond, at the bay of San Francisco, California June 8, 2023. REUTERS/Carlos Barria/File Photo
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US Auto Sales Set to Modestly Rise in First Quarter as Tariffs Signal Bumpy Ride

New vehicles are seen at a parking lot in the Port of Richmond, at the bay of San Francisco, California June 8, 2023. REUTERS/Carlos Barria/File Photo
New vehicles are seen at a parking lot in the Port of Richmond, at the bay of San Francisco, California June 8, 2023. REUTERS/Carlos Barria/File Photo

US auto sales likely inched higher in the first three months of the year on steady demand, data from the carmakers will show on Tuesday, as the industry braces for the fallout of President Donald Trump's latest tariffs.

Market research firm Cox Automotive has estimated that US new-vehicle sales volume increased 0.6% to 3.79 million units in the first quarter from a year earlier.

"Automotive tariffs — now set to take effect on April 2 — might have pulled ahead some vehicle purchases in Q1," said Jessica Caldwell, head of insights at automotive data provider Edmunds.

General Motors pickup trucks and SUVs are expected to help it retain its top spot in the quarter, followed by Toyota Motor's North America unit and Ford, according to Cox, Reuters reported.

Electric-vehicle maker Tesla is also forecast to report a drop in first-quarter vehicle deliveries on Wednesday.

President Trump's move to levy tariffs on US auto imports is widely seen as weighing on consumer sentiment and forcing a rethink on purchases.

The tariffs could also reduce the number of lower-cost imported vehicles on the market, such as Ford's compact Maverick pickup truck, further straining affordability as the average new-vehicle price nears $50,000.

"The potential for higher inflation due to new tariffs at American borders will all potentially hold back new-vehicle sales in 2025," Cox said.

Caldwell said tariffs would likely create challenges for the industry in the second quarter and beyond and expects discounts to be "harder to come by".