Shares in Advanced Micro Devices (AMD) rallied after reports that Amazon’s cloud unit may use its AI chips.
AMD – Weekly Chart
AMD stock was higher after the company hosted an investor conference this week to share its outlook for the business and its new chips. The stock trades at 127.33 with an upside target of 164.45 if it remains bullish.
Despite some encouraging comments from the CEO on Tuesday, the stock fell 3.6% after no big customer was named for the new chips.
However, the trend reversed on Wednesday after comments from staff at Amazon Cloud.
“We look at the data centre. I mean, this is an incredible market. So if you think about just AI chips in the data centre, we think this year it’s about a $30 billion market,” CEO Lisa Su said. “We think over the next three or four years it’s going to grow over 50% every year. So it’s going to be like a $150 billion market.”
Dave Brown, vice president of elastic compute cloud at Amazon, said:
“We’re still working together on where exactly that will land between AWS and AMD, but it’s something that our teams are working together on. That’s where we’ve benefited from some of the work that they’ve done around the design that plugs into existing systems.”
CNBC suggested that AMD’s new chip would not be enough to knock Nvidia off the top spot in AI GPUs. But Amazon was one company not looking to join Nvidia’s DGX Cloud product.
“They approached us, we looked at the business model, and it didn’t make a lot of sense,” Brown added.
“While its ecosystem is not as mature as Nvidia, AMD is well positioned to be a key beneficiary of AI secular growth trends for the medium term, in our view,” Baird analyst Tristan Gerra wrote.
Salesforce CEO Marc Benioff was also bullish about the AI outlook, saying:
“We’ve seen a lot of exciting waves of technology in our industry — the cloud, social, mobile — but this AI wave is going to be the biggest that anyone has ever seen”.
