AMD rises as Wells Fargo says MI300 launch 'increasing confidence' for 2024
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AMD (NASDAQ:AMD) shares rose fractionally in pre-market trading on Wednesday as investment firm Wells Fargo said the upcoming launch of the semiconductor company's MI300 offerings is providing "increasing confidence" for 2024.
Analyst Aaron Rakers, who has an overweight rating and $150 price target on AMD (AMD), met with Chairman & CEO Dr. Lisa Su and CFO Jean Hu and came away "incrementally more positive" that the ramp of MI300, slated to occur in the fourth-quarter, should help the company's push in the data center, which is increasingly seeing more spending in artificial intelligence and is dominated by Nvidia (NVDA).
"AMD reiterated its estimate that the Data Center AI accelerator [total addressable market] will grow to $150 billion over the next 3-4 yrs. AI inference to account for two-thirds of this opportunity w/ inflection by 2025," Rakers wrote in a note to clients.
He added that customer engagements have risen seven times quarter-over-quarter from the second-quarter and have started to turn into "commitments" from multiple hyperscale cloud customers, generally thought to be companies such as Microsoft (MSFT), Amazon (AMZN), Meta (META) and others.
Rakers also said that the MI300X, which is GPU only, will start production in the fourth-quarter and result in "large-scale cloud deployment" in 2024. "We think AMD is particularly positive on the MI300X positioning for large-scale LLM inferencing," Rakers added.
He also noted that the company has likely worked on versions that meet restrictions from the U.S. so they can be sold in China, with "no material silicon changes."
In addition to the opportunity surrounding the MI300 family of products, Rakers said that Dr. Su thinks the 5 nanometer Zen 4 line-up is the "right product at the right time" as it increasingly gets put into the cloud for external workloads, including Amazon Web Services new M7a instances.
"AMD reiterated its view that the ~$20-$25B/annum server CPU market will represent a single-digit longer-term growth marketâreflecting some (albeit low) unit growth and ongoing longer-term blended ASP ($/unit) expansion," Rakers added.
Additionally, both AMD (AMD) and Intel (INTC) are increasingly talking about putting AI into the edge, or the PC, which should benefit the CPU market.
"We expect AMD's Ryzen roadmap to reflect a proliferation of integrated AI-optimized chiplets (AMD's Ryzen XDNA AI engine)," Rakers explained.

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