On Friday, shares of Advanced Micro Devices (AMD) and Nvidia (NVDA) fell. Traders worried over Broadcom (AVGO) winning a large order to develop an AI chip with a customer.
Traders did not understand the strong moat that Nvidia enjoys with its proprietary CUDA.
Additionally, Broadcom’s ASIC production does not offer parallel processing capabilities that Nvidia’s GPUs provide. The former is not as flexible as FPGAs, either.
Investors should assume that the marketplace for developing chips to complete AI workloads is wide. Nvidia is a long-term winner.
AMD offers MI servers to customers building AI. Although it is less compelling to implement, AMD is a serious alternative to Broadcom’s offering. The firm sells GPU-based solutions at lower costs than those of Nvidia.
At a Citi Global Technology, Media, and Telecom conference, AMD said that its AI data center business grew by 14% Y/Y. This is despite a negative impact from the government prohibiting MI308 sales to China. Fortunately, AMD posted record EPYC server sales in the second quarter. In Q3, data center revenue will grow in the double-digit percentage sequentially.
Investors should expect the ramp in MI350 production will boost revenue in Q3 and the rest of the year. In 2026, AMD will launch MI400. The year after, in 2027, it will launch MI500.
