Jun 15, 2023

Advanced Micro Devices (AMD) shares rose on news that Amazon’s cloud unit may use its AI chips.

AMD – Weekly Chart

Weekly AMD Chart

AMD stock rose after the company held an investor conference this week to discuss its business outlook and new chips. The stock is currently trading at 127.33, with an upside target of 164.45 if the trend continues. 
Despite some encouraging remarks from the CEO on Tuesday, the stock fell 3.6% after no major customer for the new chips was named. 
However, the trend reversed on Wednesday following comments from Amazon Cloud employees.

“We examine the data centre.” I mean, this is a fantastic market. So, just thinking about AI chips in data centres, we estimate a $30 billion market this year’, CEO Lisa Su said. “We believe it will grow by more than 50% per year for the next three or four years.” As a result, it will be a $150 billion market.” 
“We’re still working together on where exactly that will land between AWS and AMD, but it’s something that our teams are working on,” said Dave Brown, Amazon’s vice president of elastic compute cloud. That’s where we’ve benefited from some of their work on the design that integrates with existing systems.”

According to CNBC, AMD’s new chip will not be enough to dethrone Nvidia as the leader in AI GPUs. However, Amazon was not interested in joining Nvidia’s DGX Cloud product. 
“They approached us; we looked at the business model, and it didn’t make much sense,” Brown continued. 
“While its ecosystem is not as mature as Nvidia’s, we believe AMD is well positioned to benefit from AI’s secular growth trends in the medium term,” Baird analyst Tristan Gerra wrote.

“We’ve seen a lot of exciting waves of technology in our industry — the cloud, social, mobile — but this AI wave is going to be the biggest that anyone has ever seen,” said Salesforce CEO Marc Benioff.

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