The recent performance of Advanced Micro Devices (AMD) compared to its chip-making rival Nvidia has sparked interest among investors, with AMD’s stock outshining Nvidia’s in the artificial intelligence (AI) chip market. While Nvidia has seen its shares rise steadily, reaching above the $800 mark, AMD has exhibited even stronger momentum, climbing higher and breaking through a $300 billion market valuation for the first time.
The surge in AMD’s stock can be attributed to several key factors, one of which is the commentary from Dell Technologies regarding AI server demand. Dell’s announcement highlighted increased orders for hardware equipped with chips from both AMD and Nvidia. This news has reassured investors about AMD’s potential to compete effectively in the AI market, dispelling some of the skepticism that may have previously surrounded the company’s AI capabilities.
Moreover, the uptick in demand for traditional server CPUs is seen as a positive indicator for AMD. It not only supports the company’s margins but also contributes to the growth of its Data Center segment, which is a key area of focus for AMD’s long-term strategy. Additionally, Dell’s significant orders for AMD’s MI300X chips, scheduled to begin shipping this quarter and expected to ramp up throughout the year, further bolster confidence in AMD’s future performance.
Analysts, such as Ben Reitzes from Melius Research, have underscored the importance of these developments for AMD’s outlook. Reitzes noted that the resurgence in demand for traditional server CPUs and Dell’s substantial orders for AMD chips are positive signs that could drive further upside for AMD’s Data Center segment.
While Nvidia shares have also experienced significant gains this year, rising by 60% through Thursday’s close, AMD’s recent strides in the AI market and the positive sentiment surrounding its future prospects have propelled its stock even further. As a result, AMD’s stock has outpaced Nvidia’s in the recent market movements, signaling growing confidence among investors in AMD’s ability to compete and thrive in the AI chip market.