AMD AI event shows MI350 is ‘okay,’ but MI400 is the possible inflection: Morgan Stanley

AMD’s (NASDAQ:AMD) showed off its new MI350 artificial intelligence accelerators at its AI event on Thursday, but it’s the upcoming MI400 that could be the “longer-term potential inflection,” Morgan Stanley said.

“AMD launched the MI350 as expected, but the focus remains on the rack scale MI400/450 product for next year which could provide the bigger inflection – if they can deliver,” analyst Joseph Moore wrote in a note to clients. Moore kept his Equal-Weight rating and $121 price target on AMD.

The event provided a number of customer testimonials, including those from Meta (META), Oracle (ORCL), OpenAI, Microsoft (MSFT), Cohere and HUMAIN, which were all “constructive but not thesis changing,” Moore added. However, AMD also gave a sneak of its MI400 series of chips and rackscale architecture (set to come next year) and the early belief is that they are on par with Nvidia’s (NVDA) Vera Rubin line, Moore explained.

“AI upside is considerable longer term but near-term products don’t support a high conviction in that view today MI400 may change the stakes, but is still something of a show-me story,” Moore added.

Delving a bit deeper, the commentary from OpenAI CEO Sam Altman stood out to Moore, which he said served as confirmation of the opportunity ahead.

“There were no unexpected customer announcements at the event, but given Open AI’s role in the cloud ecosystem, Sam Altman’s appearance on stage is likely to give some additional credibility to AMD’s ‘tens of billions’ of annual AI revenue forecasts in the eyes of investors,” Moore added.

And while the event was largely in-line with expectations (and there was not a lot new in terms of hardware), AMD did make a point of the 25 acquisitions and investments it has made over the past 12 months.

This is a “clue as to the level [of] resourcefulness at AMD and execution will continue to be a major factor as they look to gain share vs. trillion dollar market cap competitors,” Moore added.