AMD shares jump 7% and head for highest close since 2021 on AI chip demand

Lisa Su shows an AMD Instinct MI300 chip as she delivers a keynote tackle at CES 2023 in Las Vegas, Nevada, on Jan. 4, 2023.

David Becker | Getty Images

AMD shares rose greater than 7% on Tuesday to their highest since reaching a document in November 2021, on optimism that the corporate’s synthetic intelligence chips might be in greater demand from firms like Microsoft, Google and OpenAI.

Tom O’Malley, an analyst at Barclays, raised his worth goal on AMD to $200 from $120, saying that AMD might submit $4 billion in AI chip gross sales this 12 months. O’Malley, who has the equal of a purchase ranking on the inventory, cited sturdy demand for the MI300, AMD’s highest-end machine studying chip for servers.

KeyBanc analysts additionally elevated their worth goal for AMD to $195 and Nvidia to $740 on Tuesday, because of sturdy demand for AI servers.

AMD was buying and selling at $156.63 as of Tuesday afternoon, roughly 3% beneath the inventory’s all-time excessive. Nvidia, which has the overwhelming majority of the market for AI chips and was the best-performing inventory within the S&P 500 final 12 months, superior virtually 3% to $562.16.

In late 2023, AMD introduced new server chips for AI to compete with Nvidia’s H100 and A100 GPUs, that are utilized by OpenAI to coach and serve its fashions just like the one on the coronary heart of ChatGPT.

AMD and Nvidia are the 2 main producers of graphics processing models (GPUs,) which have been invented for superior pc video games, however are actually essential to coach and run AI fashions. As AI purposes gained investor consideration over the previous two years, Nvidia has been the first beneficiary as a result of the corporate developed AI software program for its chips over 10 years in the past.

“They have constructed a software program layer round their chip that the businesses I put money into simply can’t get sufficient of,” Venture capitalist Jim Breyer instructed CNBC on Tuesday.

Breyer mentioned he was “pounding the table” for each Nvidia and AMD shares. 

Analysts see AMD enhancing its AI software program, and count on main chip patrons like cloud suppliers and tech giants to look exhausting at utilizing AMD GPUs.

“We are on no account discounting the lead that NVDA has however we expect the will to have a second supply will overwhelm difficulties for the software program ecosystem,” O’Malley wrote.

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