AMD Closing Competitive GPU Gap With Nvidia, Gains Market Share From Intel In Client And Server Markets: Analyst

Benchmark analyst Cody Acree reiterated Advanced Micro Devices AMD with a Buy and a $170 price target.

Acree recently hosted AMD’s Jean Hu, CFO, for a discussion with investors. He came away with further conviction in AMD’s strong fundamental position, its increasing competitiveness in the AI market, and its continued market share gains in both the Client and Server markets versus Intel Corp INTC.

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The analyst noted a focus on the company’s AI ramp of its next-generation MI350 GPU with a pulled-ahead schedule of mid-year 2025 versus the prior schedule of the second half. With the transition, AMD expects first-half 2025 Data Center revenue to be flat due to softer seasonality and its Instinct revenue to be flat as customers wait for the launch of the new platform.

AMD broadly expects MI350 to be much more directly competitive with Nvidia Corp’s NVDA Blackwell, with MI400 likely to be technically competitive with Rubin. Nvidia’s Blackwell delays and accelerated move-up of the MI350 launch proved that AMD is closing the competitive gap.

AMD noted ASICs only make up about 20% of the total AI silicon opportunity, thereby remaining adamant about not changing its focus priority from its primary GPU roadmap.

The analyst said that the company’s Client business continues to look solid as AMD gains market share momentum in both the Desktop and Notebook markets.

At a high level, for 2025, AMD is forecasting its PC TAM to grow by a mid-single-digit percentage year-on-year. However, based on the breadth of its client CPU portfolio and strong design win momentum, the company expects to grow its Client segment revenue well ahead of the market.

While the company expects its Client business to see normal first-quarter softer seasonality, in 2025, it is benefiting from its first win at Dell Technologies Inc DELL in the commercial client space.

In the server market, AMD continues to benefit from the strong adoption of its Gen 4 and new Gen 5 designs.

The company is seeing its EPYC processors gaining traction thanks to Cisco Systems Inc. CSCO, Dell, and Super Micro Computer, Inc. SMCI.

Amazon.Com Inc AMZN, Amazon Web Services, Alibaba Group Holding BABA, Alphabet Inc GOOG GOOGL Google, Microsoft Corp MSFT launched over 100 AMD general-purpose and AI instances in just the fourth quarter.

In the fourth quarter, EPYC CPU sales grew by a strong double-digit percentage annually, thanks to high-volume deployments with ServiceNow Inc NOW, Verizon Communications Inc VZ, Visa Inc V, and others. Meta Platforms Inc META exclusively used MI300X to power their Llama 405B frontier model on meta.ai.

Microsoft leveraged MI300X to power multiple GPT-4-based Copilot services.

With over 100 customer engagements in AI, AMD expanded its ROCm software suite.

International Business Machines Corp IBM, DigitalOcean Holdings DOCN, and several other AI-focused Cloud Service Providers have begun deploying AMD Instinct accelerators for new instances. IBM also announced plans to enable MI300X on their watsonx.ai and data platform for training and deploying enterprise-ready generative AI applications.

AMD began volume production of MI325X in the fourth quarter. MI325 delivers significant performance and TCO advantages compared to competitive offerings, including H100.

AMD has passed key milestones and received unconditional regulatory approvals regarding its acquisition of ZT Systems. Additionally, AMD expects to divest ZT Systems’ data center infrastructure production capabilities.

While industry capacity will likely remain tight, AMD noted it has successfully secured sufficient wafer capacity to support its customers’ planned ramps through the end of this year and into 2026.

Price Action: AMD stock is up 1.10% at $114.35 at the last check on Tuesday.

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