AMD Keeps the AI Dream Alive Enough

livemint.com:

Advanced Micro Devices plans to end its year with a banger. Investors couldn’t wait that long to celebrate. The chip maker more commonly known as AMD has been the second-hottest semiconductor stock this year next to Nvidia.

That meant a share-price gain of 82% ahead of its second-quarter results late Tuesday—a huge jump considering the near-term pressures the company is facing from the still-sluggish market for personal computers and reduced spending on more traditional data-center components, as tech giants shift their focus to the tools needed to enable generative artificial intelligence. AMD’s results indeed reflected that reality. Revenue slid 18% year over year to about $5.4 billion, while adjusted operating income plunged 47% to about $1.05 billion.

Both were in line to slightly above Wall Street’s projections, but data-center segment revenue still showed its first decline since AMD began breaking out its results in 2021—and came in short of analysts’ projections. The one notable bright spot was revenue for the company’s segment that makes chips for PCs, which came in 23% above targets—despite plunging by more than half from a year earlier. But AMD has a big AI story to tell.

The chip maker that successfully broke through Intel’s stranglehold on the market for central processor chips used in data centers is developing a new class of graphic processors, or GPUs, designed for artificial intelligence uses in those same data centers. That will put AMD up against Nvidia, the AI chip powerhouse whose stock has outperformed AMD’s this year. Nvidia has built up very strong barriers to entry in artificial intelligence, thanks to its years of developing the chips and necessary software libraries used by developers.