(Bloomberg) — Advanced Micro Devices Inc. suffered its biggest stock decline in more than a month after the company updated its product lineup, a sign investors were waiting for more of a payoff from its push into artificial intelligence computing.
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The shares slid as much as 5.3% to $162 on Thursday, making the biggest intraday drop since Sept. 3. It followed the unveiling of new chips by Chief Executive Officer Lisa Su at an event in San Francisco, but no big changes in the company’s near-term financial outlook.
AMD has emerged as the biggest contender to Nvidia Corp. in the lucrative market for artificial intelligence processors, and Su argued that its latest chips will exceed some capabilities of its rival. Computer systems based on AMD’s MI325X processors will be available soon and have an edge over machines running Nvidia’s H100, she said at the event. The MI325X’s use of a new type of memory chip will give it better performance at running AI software — a process known as inference — she said.
The Santa Clara, California-based company is trying to crack Nvidia’s dominance in so-called AI accelerators — chips that have become essential to the development of artificial intelligence systems. Like Nvidia, AMD has committed to bringing out new accelerators every year, stepping up its pace of innovation.
Still, AMD has a long way to go to match Nvidia, and Wall Street has been waiting for signs of progress. That may not come until the company’s quarterly earnings report, which is expected around the end of this month.
Under Su, who just marked her 10th anniversary in the top job at AMD, the company has eclipsed its longtime nemesis Intel Corp. in market valuation. But both companies were caught off guard by how ferociously the industry embraced AI accelerators.
Of the two, AMD has responded far more quickly and established itself as the closest rival to Nvidia. AMD has set a target of $4.5 billion of revenue from the new type of chips for this year, a rapid increase.
Su has said the overall market for such chips will hit $400 billion in 2027. On Thursday, she said that the company expects that number to reach $500 billion in 2028.
At the event, Su also said the company is releasing a new line of server processors based on its “Turin” technology, making a fresh push into a market once dominated by Intel.
Computers are going on sale with AMD’s fifth-generation EPYC central processing units, or CPUs, she said. The chips have as many as 192 processor cores and can outperform the latest Intel products, she said.
The company said that it now has 34% of the market for this category of chips when measured by revenue. Though Intel still dominates the segment, it once had a 99% share.
Su said that she expects continued growth in demand for AI and that the industry is still “just getting started” in its use of the new technology.
Separately, Su said AMD has no current plans to change the suppliers it uses for cutting-edge manufacturing. But the company wants more geographical diversity in terms of its production, and is currently working hard to qualify Taiwan Semiconductor Manufacturing Co.’s new Arizona facility. Su refused to rule out using either Samsung Electronics Co. or Intel in the future. She said AMD is keeping an open mind.
“We believe it’s important to have geographical diversity,” she said.
AMD has a different strategy than Nvidia and it’s resonating with customers, Su said. Her larger competitor is offering complete systems, including models and software, that AMD believes are closed and proprietary. AMD is far more open to working with other companies, even Intel and Nvidia, she said.
“The difference is that we don’t think we’re the only ones who have good ideas,” she said.
(Updates share reaction starting in first paragraph.)
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