Advanced Micro Devices (AMD) hosted its highly anticipated data centre and artificial intelligence (AI) technology event on the 13 ^th of June. The event unveiled the long-awaited MI300 chip, a cutting-edge solution specifically designed to cater to AI workloads. AMD’s strategic objective is to gain a substantial market share in this segment, currently dominated by its primary competitor, NVIDIA.

The realm of artificial intelligence is witnessing intensified competition, not only among software companies vying for consumer attention but also among hardware giants positioning themselves for a potentially transformative multitrillion-dollar revolution in global data centres.

AMD’s announcement introduced the new MI300X graphics processing unit (GPU), strategically targeted towards AI and scientific computing applications. This GPU is positioned as a viable alternative to Nvidia’s H100, which is currently facing supply constraints due to the overwhelming demand for AI computing. AMD is diligently working towards sampling the MI300X in the upcoming quarter, with production set to ramp up in the fourth quarter.

The MI300X chip boasts an accelerator specifically designed to enhance processing speed for generative AI programs, such as ChatGPT and similar chatbots. The demand for microchips has experienced a significant surge since the onset of the pandemic, as companies and consumers increasingly rely on online platforms for learning, work, and shopping.

This announcement by AMD represents a challenge to Nvidia, which presently enjoys over 80% market share in AI chips. Nevertheless, Nvidia’s H100 has established a solid presence in data centres, posing a potential hurdle for AMD to overcome. Notably, Google Cloud recently unveiled the A3 supercomputer, incorporating over 26,000 Nvidia H100 GPUs, while Microsoft employs Nvidia GPUs to power BingGPT, its AI service integrated into its search engine. Oracle and Amazon also offer H100 GPUs through their respective cloud services.

GPUs serve as crucial components utilized by organizations like OpenAI to develop advanced AI programs like ChatGPT. Their parallel processing capabilities and optimization for efficient handling of vast amounts of data make them well-suited for tasks necessitating high-speed and effective graphical processing.

AMD emphasizes that its latest MI300X chip and CDNA architecture were purposefully developed to cater to the requirements of large language models and advanced AI applications. With a maximum memory capacity of 192 gigabytes, the MI300X surpasses competing chips such as Nvidia’s H100, which supports a maximum of 120 GB of memory.

Through its infinity architecture technology, AMD combines eight MI300X accelerators into a single system, mirroring similar integration efforts by Nvidia and Google, who integrate eight or more GPUs for AI applications.

Nvidia’s stock price has nearly doubled since the beginning of the year, largely due to the AI craze. The semiconductor company recently surpassed the remarkable milestone of $1 trillion in market capitalization, becoming the seventh U.S. company in history to achieve this feat. Nvidia currently dominates more than 80% of the GPU market for AI.

While AMD ranks as the second-largest player in the central processing unit (CPU) market globally, trailing Intel, the company unveiled the Instinct MI300X, a generative AI accelerator hailed as « the world’s most advanced GPU. » This move signifies AMD’s declaration of war against Nvidia, the reigning GPU market leader. Considering that approximately about 41 trillion of existing data centre infrastructure requires upgrading to support accelerated computing and AI workloads, it comes as no surprise that AMD seeks to seize a portion of this lucrative opportunity.

Notably, AMD holds a unique position as the only company capable of manufacturing high-performance CPUs and high-performance GPUs concurrently, setting it apart from its competitors.

Source: Tradingview

After bottoming at $54.59 in October 2022 the share price rebounded strongly gaining almost 150% in the short span of eight months. The share price got a brief rise after the chipmaker unveiled details about its new artificial intelligence chip; however, the rally reversed quickly, and the price has been trading lower over the past four trading sessions.

A large inverse head and shoulders pattern has been confirmed in May 2023, suggesting that the down trend from the November 2021 high has bottomed in October 2022, and that a new primary up trend is underway. The recent breakout suggests that levels to $150.00 are achievable in the months ahead.

The Relative Strength Index (RSI) has improved significantly and has moved into its bull market range in May, also pointing to higher price levels over the medium-term. In the short-term, a pull back to $110.00 and potentially lower is likely as the RSI unwinds its strongly overbought momentum conditions.

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