AMD stock slides after restrained quarterly report: AI chip pioneer in focus

On Wednesday, Advanced Micro Devices' shares experienced a significant decline after the company's quarterly figures failed to meet Wall Street's expectations. This led to the semi-annual performance of the AI chip manufacturer slipping into negative territory. AMD, positioning itself as a comprehensive player in the AI investment sector, is relying on its segments in data centers, servers, and personal computers as it seeks to maintain its market position against Nvidia. With its new series of high-performance processors, the company specifically aims for a larger market share. AMD's flagship, the MI300 graphics processing unit, is experiencing increasing demand from major customers like Meta Platforms, which are heavily investing in training their large language model datasets. Nevertheless, the supply remains strained due to capacity limits at key assembly plants and overall increased demand, compelling AMD to carefully manage investor expectations. AMD CEO Lisa Su emphasized at an investor conference that the opportunities are exponentially expanding due to the rapid adoption of AI technologies. In the data center sector, the market for AI accelerators is expected to grow annually by over 60 percent until 2028. For the MI300 project, AMD forecasts revenue of over 5 billion USD in 2024, which disappoints investors given the muted revenue expectations of 7.5 billion USD in the fourth quarter and a gross margin of about 54 percent. Lucas Keh, an analyst at Third Bridge, still sees AMD as a clear number two in the AI accelerator market and recognizes potential to gain market share from Nvidia. Analysts at Cantor Fitzgerald, led by C.J. Muse, see a long-term revenue potential of 12 billion USD for the MI300 line. In the meantime, shares are expected to move within a price range of 150 to 170 USD until clarity on earnings power can be established to support the price target of 180 USD.