On 30th of April, Tuesday, the forecast AI chip sales highlights of popular processor manufacturer Advanced Micro Devices (AMD) failed to impress the stakeholders causing a stock drop of 7%. The CEO Lisa Su revealed to the media that the team estimates AMD AI chip solutions to reach sales over $4 billion by the end of this year 2024. This expectation is a rise of $500 million from the previous estimate.
The Rivalry
AMD and Nvidia are both known for their best-in-class chipsets. However, Nvidia seems to have taken a significant lead ahead of AMD in the race for AI chipsets. The market is taking Nvidia chipsets with full bursts and due to the rise in AI apps the demand seems to be increasing further. It is leading the AI industry with an 80% market share for AI server semiconductors.
AMD’s Market Landscape
“Overall AI demand has exceeded anyone’s expectations in 2024,” said Lisa Su over the conference call with media teams. Gaming revenue took a noticeable dip, plunging by 48% to $922 million. The company had anticipated this decline, as it had projected a significant double-digit drop in this sector. The decrease comes as no surprise, given that revenue from the chips it supplies for popular gaming consoles. These include Xbox and PlayStation 5 which have reached their pinnacle. This downturn aligns with the typical trajectory for gaming console revenue, which tends to peak around the fifth year following the release of a new console generation.
According to CFO Jean Hu’s remarks back in January, AMD’s console revenue typically hits its zenith after approximately four years.
The race for AI chipsets has just begun with more turns to come as we see more and more generative AI adoptions across various industries!
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