AMD shares jumped more than 8% on Tuesday, with several analysts raising their price targets
Tencent Technology News reported on January 17 that foreign media reported that AMD's stock price rose more than 8% on Tuesday, reaching the highest closing price since the record in November 2021, and the market's optimistic expectation that the company's artificial intelligence chips will be subject to higher demand from companies such as Microsoft, Google and OpenAI drove the stock price higher.
Barclays analyst Tom O'Malley raised his price target for AMD from $120 to $200, saying that AMD's AI chip sales could reach $4 billion this year. O'Malley, who rated the stock as a "buy," cited strong demand for the MI300, AMD's highest-end machine learning chip for servers.
KeyBanc analysts also raised their price targets to $195 for AMD and $740 for Nvidia on Tuesday due to strong demand for AI servers.
AMD closed at $158.74 on Tuesday, roughly 2% below the stock's all-time high. Nvidia, the top-performing stock in the S&P 500 last year, rose 3% to $563.82 on Tuesday. At present, NVIDIA occupies the vast majority of the AI chip market.
At the end of 2023, AMD announced new AI server chips to compete with Nvidia's H100 and A100 GPUs, which are used by OpenAI to train and serve its models, such as ChatGPT's core model.
AMD and Nvidia are the two major producers of graphics processing units that were originally invented for advanced computer games but are now essential for training and running AI models. As AI applications have caught the attention of investors over the past two years, Nvidia has been the main beneficiary, as the company developed AI software for its chips more than 10 years ago.
Venture capitalist Jim Breyer said, "They've built a software layer around their chips, and the companies I've invested in are in high demand. ”
Breyer said he is highly recommending Nvidia and AMD stocks.
Analysts see AMD improving its AI software and expect major chip buyers like cloud service providers and tech giants to seriously consider using AMD's GPUs.
O'Malley believes that while Nvidia's leadership in AI chips is indisputable, the market's need for another option may outweigh the consideration of the software ecosystem, which is an opportunity for AMD. (Compiler/Xiaobei)