AMD stock to benefit from Microsoft’s chip push?
Demand for chips remains solid, as Nvidia’s recent earnings showed. Is it time to look at AMD as another potential beneficiary?
AMD stock to benefit from Microsoft’s chip push?
Demand for chips remains solid, as Nvidia’s recent earnings showed. Is it time to look at AMD as another potential beneficiary?
Microsoft's recent announcement to offer AMD's MI300X AI chips as an option for cloud computing customers on Azure, alongside Nvidia's H100 GPUs, is a strategic move driven by the unprecedented demand for AI and high-performance computing (HPC) chips. This decision is not a reflection of Microsoft favouring one chip manufacturer over another, but rather a response to the severe supply constraints plaguing the semiconductor industry.
Unending demand meets supply bottlenecks
The demand for AI and HPC chips has skyrocketed in recent years, fuelled by the rapid advancement of artificial intelligence and its applications across various industries. However, the semiconductor manufacturing capacity, particularly for advanced packaging required for these specialized chips, has been severely constrained. Both Nvidia and AMD, the leading players in the GPU market, have been struggling to keep up with the insatiable demand.
Nvidia rules the roost, but AMD could be a challenger
While Nvidia remains the undisputed leader in the AI and HPC chip market, the current supply crunch has presented AMD with an opportunity to gain a stronger foothold. AMD's MI300X chips offer a viable alternative for cloud computing customers seeking access to cutting-edge AI hardware. By diversifying its chip offerings, Microsoft can better address the needs of its customers and mitigate potential supply chain disruptions.
LSEG Data & Analytics analyst AMD recommendations
LSEG Data & Analytics data shows a consensus analyst rating of ‘buy’ for AMD – 15 strong buy, 25 buy and 10 hold (as of 28 May 2024).
AMD – technical view
The AMD share price, up around 20% year-to-date despite a near 40% drop from its $227.30 March peak to its $141.16 late-April low, seems to have resumed its advance as can be seen on the weekly chart.
AMD Weekly Chart
A rise above last week’s high at $173.14 would engage the April high at $187.24, above which beckons the March all-time high at $227.30.
Support comes in along the October-to-May uptrend line at $147.28 and between the 200-day simple moving average (SMA) and early-May low at $141.31 to $141.16.
AMD Daily Chart
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