AMD’s AI product event could be ‘a news event’ says analyst By Investing.com

Investing.com — AMD (NASDAQ: ) is set to host its “Advancing AI” event this week, where analysts expect to hear about new product announcements that could boost sales and drive the chipmaker’s stock price.

Meanwhile, analysts at Lynx Equity Strategies believe this will be “a news event.”

“AMD stock has seen modest growth over the past week on investor expectations for clarity on the MI325X and beyond. We think investors will probably be disappointed,” they emphasized.

Lynx’s team is skeptical of AMD’s ability to close the gap on Nvidia (NASDAQ: ), noting that the latter continues to dominate the market. Despite AMD’s ambitious claims when launching the MI300X almost a year ago, it has made minimal progress in challenging NVIDIA’s stronghold.

“We don’t expect the MI325X to significantly change the narrative,” analysts say, suggesting that AMD may “run a distant second” to its rival.

While AMD is expected to highlight developments in data center processors and AI PCs, Lynx believes that investors’ attention will remain firmly on the MI series. Analysts warn that if AMD cannot demonstrate a clear factor for increasing market share, the stock could retest annual lows.

After AMD’s Computex presentation a few months ago, there was some optimism surrounding the company’s next-gen data center GPUs, especially given the higher HBM density on AMD’s MI325X — 288GB in comparison with 141 GB from NVIDIA on the H200.

However, Lynx notes that customer traction has been weak in the months since. Although AMD management boasts superior benchmark results compared to NVIDIA’s Hopper series, the company’s analysts remain unconvinced, noting that “while running real-world workloads, we believe the MI300X continues to trail NVDA’s H100.” .

“We don’t expect the MI325X to change the narrative significantly. The superior density of HBM is only one of the factors at work; the software stack, network backplane and power consumption matter just as much,” the analysts continued.

They believe AMD has high hopes for the MI325X and is expanding its chip-on-wafer-on-substrate (CoWoS) capability in anticipation of future demand. In particular, Broadcom Inc’s (NASDAQ: ) strong guidance for its GPU-based AI data center ethernet connectivity business could point to growing demand from AMD AI servers. Microsoft (NASDAQ: ) also appears to be a key customer, although Lynx remains uncertain about “who are moving the needle.”

Adding to the uncertainty, Meta Platforms (NASDAQ: ), which backed AMD’s launch of the MI300X last year, may have seen its commitment to AMD diminish recently.

“We believe that META may have strengthened its plans for internally developed silicon as a future alternative to NVDA. And Amazon/AWS, too, we doubt if AMD is seen as a viable alternative to NVDA,” explains Lynx.

The firm also mentions Oracle (NYSE: ) as a potential customer, along with enterprise interest, but cautions that the MI series, along with its software stack, may not be the plug-and-play solution that AMD marketed like

“Outside of MSFT, we don’t think end customers will spend resources to help bridge the gap as it’s not clear what the outcome would be,” the analysts said.

“We expect stocks to trade lower after today’s event and likely return to year lows.”

As for potential surprises at the event, Lynx suggests that while Amazon (NASDAQ: ) or Google (NASDAQ: ) could be announced as new customers, that would likely be limited to externally facing cloud instances.