AMD's AI chips have earned significant endorsement from Sam Altman, a notable figure.
In the rapidly evolving world of artificial intelligence (AI), Advanced Micro Devices (AMD) is making significant strides to challenge Nvidia's dominance in the AI chip market. While Nvidia currently holds over 80-90% market share and reported revenues of $130.5 billion for its fiscal year ending January 2025, AMD is positioning itself as a strong competitor.
AMD's CEO, Lisa Su, recently unveiled the Instinct MI400 line of chips, which are set to challenge Nvidia's current market leader status. These new chips, scheduled to start shipping to customers next year, are expected to take some market share from Nvidia, the leading AI chipmaker.
The MI400 chips are designed to offer competitive performance at a lower price point than Nvidia's offerings, a value proposition that has driven increased interest. AMD's MI355X chip, for instance, is claimed to match the performance of Nvidia's significantly more expensive GB200 chip.
Financial analysts, including those from HSBC, view AMD's MI350 series as comparable to Nvidia's current Blackwell chips, with anticipation that the forthcoming MI400 chips will further narrow the competitive gap. This positive outlook suggests AMD is expected to improve its position and market share in the AI chip segment.
The AI chip market remains volatile yet lucrative, and AMD is increasingly viewed as a necessary "second source" alternative to Nvidia. This could ease supply shortages and pricing pressures, making AMD an attractive option for investors. AMD's stock trades at more than 90 times its trailing earnings, and its forward earnings multiple is 34, but its growth rate has been improving, indicating strong investor interest.
OpenAI, the company behind ChatGPT, has announced its intention to use the new AMD chips, further boosting AMD's credibility in the AI sector. However, AMD's margins may take a hit in the near term as it competes on price with Nvidia. Proving that its chips can be formidable alternatives to Nvidia's chips will be crucial for AMD in the long run.
Over the past 12 months, shares of AMD have decreased by 20%, while Nvidia's shares have increased by around 14%. Investors should pay close attention to AMD's gross margins to see if they are declining as it rolls out its newest chips.
Despite the challenges, AMD's current valuation of $210 billion is a fraction of Nvidia's market cap, currently standing at $3.49 trillion. AMD could potentially win over investors by not only growing its sales but also its bottom line, making it a stock to watch in the AI chip market.
[1] MarketWatch, "AMD's new AI chips take aim at Nvidia's dominance," 10th June 2025. [2] TechCrunch, "Nvidia's AI chip market share remains near-monopoly, but AMD is closing the gap," 15th June 2025. [3] Bloomberg, "AI chip market to hit $262 billion by 2030, with AMD as key player," 20th June 2025. [4] Reuters, "AMD's MI350 series compared to Nvidia's Blackwell chips, MI400 expected to narrow competitive gap," 25th June 2025.
- In the AI chip market, as AMD's new Instinct MI400 chips challenge Nvidia's dominance, data-and-cloud-computing companies are considering them as a more cost-effective option for investing, positioning AMD as a significant player in the financial landscape.
- Technology advancements in AI chips, such as AMD's competitive new line-up, are attracting investor interest due to their potential to disrupt the current market leader, Nvidia, and offer opportunities for increased returns in the long run.
