AMD Bets on AI Chips to Take on Nvidia, Fuel Growth Despite High Valuation
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AMD's new MI300 AI chips have strong price-to-performance ratio and could take substantial market share from Nvidia in AI compute market.
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Analyst estimates AMD will sell $4B of MI300 chips in 2023, growing to $7.6B by 2025. AI chips could be 25% of AMD sales by end of 2024.
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AMD is already leader in server CPU chips for cloud computing and expected to gain more share there while market recovers in 2024.
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Gaming graphics chip recovery expected in 2H 2023 but gaming not seen as big growth driver for AMD.
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AMD stock valuation very high at over 50x forward earnings, difficult to justify with total sales growth expected to be only 10% in 2023 and 28% in 2024.