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Key Points
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AMD is significantly smaller than AI chip leader Nvidia.
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AMD has a substantial opportunity in the fast-growing market for inference chips.
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Grabbing a small market share from Nvidia could result in significant upside for AMD.
Advanced Micro Devices (NASDAQ: AMD) is positioning itself to capitalize on the growing inference chip market, currently dominated by Nvidia (NASDAQ: NVDA). Despite Nvidia’s established lead in AI training models, AMD is making strides in the inference sector, where demand is expected to outpace training in the long term.
Recently, a large AI company began utilizing AMD’s graphics processing units (GPUs) for a significant portion of its inference operations. Notably, seven of the ten largest AI operators now use AMD chips. As of the last quarter, Nvidia generated over $40 billion in data center revenue, compared to AMD’s $3 billion. This disparity suggests that even small market share gains in inference could greatly benefit AMD’s growth.
AMD is enhancing its ROCm software platform, which aims to compete with Nvidia’s CUDA. The recent ROCm 7 update targets inference workloads, where AMD can offer cost-effective solutions without sacrificing performance. Additionally, AMD’s involvement in the UALink Consortium promotes an open standard for GPU connectivity, aiming to reduce reliance on Nvidia’s hardware.
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