AMD's AI Gains in Focus

AMD is facing increased scrutiny to demonstrate substantial gains in the artificial intelligence sector, particularly as its stock performance has surpassed that of Nvidia this year. Investors are keen to see if AMD can justify its recent rally with strong earnings driven by the AI arms race.

AMD's MI355X GPU is gaining traction among major companies, reportedly delivering significantly more compute power than its predecessor and emerging as a strong competitor to Nvidia's offerings. Bolstered by robust demand for AI accelerators, AMD has increased the price of its MI350 series chips to over $20,000. This surge in demand has led to a 57% increase in data centre revenue in Q1, fuelled by the company's CPUs and GPUs. Furthermore, recent policy changes in the U.S. have eased export restrictions, enabling AMD to resume chip shipments to China, potentially adding hundreds of millions in revenue.

Analysts anticipate another strong quarter of data centre growth, with Q2 sales expected to increase by 27% to $7.41 billion compared to $5.84 billion the previous year. However, AMD is also navigating competitive pricing pressures in the CPU and GPU market, which could impact Q2 earnings.