AMD puts great hope in a newly developed chip for artificial intelligence (AI) based products and plans to generate revenues of two billion US dollars next year. As CEO Lisa Su announced in a teleconference on the quarterly figures, the delivery of the processor is set to begin in the coming weeks.
AMD is already seeing high demand and numerous customer pre-orders, particularly from the cloud computing sector. The company expects a revenue of $400 million from the sale of the new AI chip for the current quarter. According to CEO Su, this processor will be the fastest product in the company's history to reach the revenue threshold of one billion dollars. She estimates the AI market will grow to over $150 billion by 2027.
These optimistic forecasts raise the hope that the strong demand for the AI chip could offset the decline in orders from the video game segment. Previously, AMD had given a rather modest sales forecast for the fourth quarter, which led to a drop in the stock price. Analysts were expecting sales of $6.4 billion, while AMD had only forecasted $5.8 billion to $6.4 billion.
Demand for automotive, industrial, and network system chips remains weak. Consequently, AMD's stock fell by up to 5.1 percent in after-hours trading in the US, but it managed to recoup most of the losses following statements about the new AI chip. However, in the NASDAQ trading the following day, the stock’s price remained under pressure and temporarily lost 2.41 percent to 96.13 US dollars.
In the third quarter, AMD was able to increase its revenue by over four percent to $5.8 billion compared to the previous year. Profits also rose from $66 million to $299 million. The success is due in part to the recovery of the traditional PC business, which had suffered from high excess capacities in the past.
The US investment bank Goldman Sachs has lowered the price target for AMD from 137 to 125 US dollars, but remains in favor of a buy recommendation. Analyst Toshiya Hari explains in a study that although the outlook for the fourth quarter is below expectations, market share gains in the server business and the momentum in the data center segment continue to speak for the company. CEO Lisa Su is convinced of the potential of the new AI chip and predicts that it will soon surpass the sales mark of one billion dollars.
