AMD’s AI event falls short to spur investor sentiment, remains mixed bag: analysts

Although there was much hype going into AMD’s (NASDAQ:AMD) Advancing AI event, analysts were mixed in their reactions to the announcements.

“AMD closed down 4% for the day, as investors reached negatively after CEO Dr. Lisa Su and her team didn’t promulgate an upgrade to its $4.5B AI revenue forecast or outlook through 2025,” said Seeking Alpha analyst JR Research. “AMD must demonstrate more confidence with its guidance at its upcoming Q3 earnings release.”

AMD showed off its new Turin EPYC data center CPUs and an Instinct MI325x AI accelerator. The company also unveiled Ryzen AI PRO 300 Series, the first Microsoft (MSFT) Copilot + laptops designed for enterprise.

AMD also reiterated a two-year roadmap to develop AI chips, with the MI325X in 2024, MI350 in the second half of 2025, and MI400 in 2026.

Dr. Su noted the data center AI accelerator market is expected to grow to $500B in 2028, up from $45B in 2023.

While AMD did up its total addressable market forecast through 2028, investors are justified to know what that means for AMD’s near-term performance, JR Research added.

On Thursday, AMD touted MI325x to be better than Nvidia’s (NVDA) H200 HGX on several parameters. However, Nvidia has its Blackwell GPUs coming up, and it remains to be seen how AMD’s products hold against them, despite offering a pledge to deliver performance and memory leadership on an annual basis for generative AI, similar to plans by rival Nvidia to shorten its release cycle to an annual basis.

“The event really highlights AMD’s strength in the AI space,” said Lucas Ma of Envision Research, Investing Group Leader for Envision Early Retirement. “I am impressed by how AMD’s Instinct GPUs and EPYC CPUs have been underpinning many of the AI projects at tech majors such as Oracle (ORCL), Microsoft (MSFT) and Meta (META),”

AMD called the fifth generation EPYC the world’s best CPU for cloud, enterprise and AI. It’s already resonated in the marketplace, as Kevin Salvadore, VP of Infrastructure and Engineering at Meta Platforms, said at the event that the company has deployed over 1.5M EPYC CPUs.

AMD also highlighted its latest version of ROCm platform, an open software stack that’s optimized for generative AI and high performance computing applications, something Ma said investors should not forget.

“The event has impressed me equally on the progress AMD has made in building its software ecosystem centered around its ROCm to help AI developers,” he added.

Citi analysts maintained their Buy rating and $210 price target on AMD after the event, as the company raised its total addressable market, but the MI300 might dilute margins for a while.

However, they also said AMD has a few advantages over Nvidia, including more memory, lower prices and an open ecosystem.

Jefferies analyst Blayne Curtis kept his Buy rating but noted the event was “more of a product launch than a dive into the roadmaps,” and the question “still lingers” how much of the $500B AMD will get.

Oppenheimer analysts called the event “largely uneventful” as they said, “[management] recapped already well understood CPU/GPU product roadmaps.”

AMD is making progress with its MI Instinct offerings, as evidenced by its $4B in AI revenue over the past 12 months. However, expectations have remained out of reach, they added. As such, they kept their Perform rating on AMD.