AMD goes all out

AI evangelists have been searching for a sign to prove all this AI spending is worth the hype. Yesterday, AMD CEO Lisa Su answered their prayers.

AMD dropped some seriously ambitious numbers at its first Financial Analyst Day in three years: The company said that it’s aiming for roughly 35% compounded annual growth in the next three to five years, as well as about 60% growth in its data center business. Su also said she sees the total addressable market for AI data center chips reaching $1 trillion by 2030, and argued that AMD would have “double-digit” share in that market over the next three to five years. All of this, of course, is only possible because of “insatiable” AI demand.

Su doubled down on big tech’s big spending plans when interviewed by CNBC this morning: “I don’t think it’s a big gamble,” she explained. “I think it’s the right gamble.”

Shares of the semiconductor giant shot up 9% today. All of these bold predictions come as a follow-up to the company’s Q3 earnings announcement last week, which triggered a selloff despite AMD beating expectations.

Challenging Kingvidia’s throne: Nvidia currently owns 90% of the chip market, according to CNBC. But AMD could catch up, given it’s the only other major developer of graphics processing units, or GPUs. Shares of AMD have surged an eye-popping 114.33% this year so far, beating even Nvidia’s gain of 44.31%.

Can all of this pay off?

AMD is clearly confident despite growing scrutiny over the seemingly circular web of spending among big tech giants that’s marked the AI boom.

Michael Burry of “The Big Short” fame disclosed short bets against Nvidia and Palantir last week, and recently accused companies of understating the depreciation of chips, calling it “one of the more common frauds of the modern era” on X.

Some analysts weren’t wooed by AMD’s big forecasts yesterday, and remained focused on the numbers we saw in last week’s earnings release. “The real issue here then is that the stock is going to be binary around AI market share in our view, and a 5 year single point earnings model doesn’t really capture the richness of that debate,” explained Morgan Stanley analyst Joseph Moore in a note today. “We knew all of that coming into this meeting, and it didn’t change our mind at all,” he said, reaffirming his “equal weight” rating.—LB