AMD forecasts $2 billion sales of AI chips, helping shares rebound
By Chavi Mehta and Stephen Nellis
(Reuters) -Chip designer Advanced Micro Devices (NASDAQ:AMD) on Tuesday forecast $2 billion in sales in 2024 from a chip that aims to compete with Nvidia (NASDAQ:NVDA) in the artificial intelligence (AI) market, helping shares recover after a quarterly outlook missed expectations.
AMD forecast fourth-quarter revenue and gross margins below Wall Street estimates, hurt by a weak gaming market as well as a decline in demand from some industries for its programmable chips.
Shares of the Santa Clara, California-based company fell as much as 4.6% in after-market trading but turned roughly flat after executives disclosed on a conference call the outlook for its chip to compete with Nvidia. AMD is readying a chip called the MI300X it hopes will loosen Nvidia's grip on the market for data center AI chips used to create technologies similar to ChatGPT.
During a call with investors, AMD Chief Executive Lisa Su said that «multiple, large hyperscale customers» had committed to using MI300 chips, using a term that commonly refers to large tech and cloud computing companies.
The company said it expects $400 million in revenue from the chip in the fourth quarter, up from the $300 million forecast the company had given in August. Su gave investors a 2024 sales forecast for the first time for the MI300 chip, of $2 billion.
But weakness in other segments left the company short of Wall Street expectations for the fourth quarter.
While the PC market is in recovery mode, demand for programmable chips used by industries such as wireless communications, healthcare and automotive has slowed down.
Intel (NASDAQ:INTC) last week said it expects demand from that segment to decline and stay down for the «next few»
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