AMD is now generating over $8 billion in AI revenue, driven by strong demand, improved pricing power, and positive market reception of its AI chips, leading to a doubled price target of $200. Alongside AI growth, AMD’s non-AI segments remain robust, contributing to a significant turnaround and positioning the company as a key beneficiary in the expanding semiconductor market.
In the discussion, Lee highlights that AMD is now generating over $8 billion in AI-related revenue, a figure that significantly surpasses previous expectations and consensus estimates. This marks a substantial shift in the company’s financial outlook, reflecting stronger demand and improved market reception for AMD’s AI chips compared to earlier in the year.
Frank, joining the conversation, reveals that his price target for AMD has doubled to $200, a bold move that diverges from many of his peers. This adjustment is driven by recent positive developments, including better-than-expected feedback on AMD’s latest MI 355 chip and a notable increase in pricing power. The interest from hyperscalers further supports the optimistic revenue projections for AMD’s AI segment.
The conversation also touches on the broader semiconductor sector, with Frank emphasizing the importance of pricing power among chip suppliers. While Nvidia has dominated this space during the initial AI boom, other companies like AMD and Broadcom are now beginning to benefit from increased average selling prices (ASPs) and stronger demand. Broadcom, in particular, has seen a positive outlook due to its ASIC chips gaining traction and pricing leverage.
Beyond AI, AMD’s non-AI business remains robust, with growth observed in traditional client and PC markets. Despite a generally weak overall market, AMD has managed to increase its market share and ASPs in these segments. Additionally, the company continues to perform well in traditional data center chips, which are distinct from the AI-focused data center products but still contribute significantly to revenue.
Overall, the discussion underscores a notable turnaround for AMD, driven by both AI and non-AI segments. The improved pricing power, strong product reception, and expanding market opportunities position AMD favorably within the semiconductor industry, suggesting that the company and select peers could be key beneficiaries of the ongoing AI-driven demand surge.