AMD: AI catch-up with substance

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  Christian Ingerl
  Redaktor

Las Vegas was more than just a stage for gadgets this year; CES became a showcase for the next stage of artificial intelligence. Right at the beginning of the week Nvidia and AMD presented their new generations of AI processors. While market leader Nvidia dominated the headlines with the series production of its top chip “Vera Rubin” and massive performance promises, AMD focused on a differentiated product strategy – sending a clear signal to investors: the challenger is ready for the next growth spurt.

Product innovations

AMD CEO Lisa Su presented several new accelerators in Las Vegas. The flagship “MI455” is designed for large AI data centers and is to be used by partners such as the ChatGPT developer OpenAI. With the “MI440X”, AMD is specifically targeting companies whose data centers are not designed exclusively for AI – a segment that has so far been heavily dominated by Nvidia. Su also gave an outlook on the next generation: the “MI500” planned for 2027 is expected to achieve up to a thousand-fold increase in performance compared to previous models.

Strong figures and record outlook

The operating momentum is reflected in the latest quarterly figures. In the third quarter, sales rose by 36% to USD 9.25 billion, while adjusted earnings per share increased by 30% to USD 1.20. The data center segment developed particularly strongly: revenues grew by 22% to USD 4.3 billion and exceeded market expectations. AMD is forecasting revenues of around USD 9.6 billion for the current quarter – also above consensus estimates.

“Turnover and profitability are at record levels,” said CEO Su after presenting the figures, adding: “Our strong outlook reflects increased growth momentum.” The main driver is the business with processors for data centers and AI. There is also a tailwind from the traditional server business: AMD is continuously gaining market share in CPUs, while demand for server processors is also increasing as part of the expansion of AI infrastructure. The PC segment also benefited from the introduction of AI-enabled devices and the start of a renewal cycle.

Opportunities and risks

The long-term growth prospects underline the strategic positioning. At the most recent analyst day, AMD put the addressable market for data center chips at around USD 1 trillion by 2030. CFO Jean Hu expects average annual sales growth of 35% for the Group over the next three to five years, and even around 60% in the data center segment. “Data center is the biggest growth opportunity – and AMD is very well positioned here,” emphasizes Su.

Nevertheless, the competitive situation remains challenging. Nvidia dominates the global market for AI accelerators with a market share of around 80% and, according to its own statements, sells “every chip the company can produce”. But AMD is gaining in profile. The multi-year contract with OpenAI not only provides the company with sales potential, but also references in cutting-edge technology. OpenAI President Greg Brockman made it clear in Las Vegas how crucial chip advances are for scaling modern AI models. AMD is also diversifying its customer base by targeting enterprise data centers that are not exclusively designed for AI with products such as the MI440X.

Regulatory risks – such as export restrictions to China – affect the entire industry. AMD has licensed adapted products for this purpose and has signaled its willingness to comply with regulatory requirements. At the same time, the domestic market is growing: the expansion of data centers in the US and Europe as well as increasing investments by large cloud platforms are supporting demand.

Tailwind for the share

Following a phase of heightened skepticism about a possible AI bubble, sentiment has recently brightened. The combination of product innovations, better-than-expected quarterly figures and a structurally growing market speaks for a sustainable earnings base. Although Nvidia remains the benchmark, AMD has established itself as a serious alternative – both technologically and commercially. This change is also increasingly reflected on the stock market. Despite short-term volatility, analysts continue to see average share price potential of around 25 percent.

Investment solutions

If you share this positive scenario and would like to add even more speed to the journey, choose the Long Mini Future SVDB8U from UBS. The leverage is currently 6.0, the distance to the knock-out at USD 192.5645 is 12.9%. Slightly less speculative is the mini future MAMLCT from Leonteq. Here the knock-out is 26.5% away, but the leverage is also noticeably lower at 3.4.

We also consider a sideways speculation on AMD to be interesting for conservative investors. The Barrier Reverse Convertible RAMA1V from Bank Vontobel would be ideal for this. The security matures in October 2026 and promises a maximum profit opportunity of 9.2% and 11.9% p.a. respectively. The product also has a risk buffer of 43.5%.