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AMD’s AI Strategy Faces Investor Scrutiny Amid Shift to Custom Chips

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Advanced Micro Devices (AMD) faces heightened investor scrutiny over its artificial intelligence (AI) strategy as Big Tech firms increasingly develop custom silicon, potentially limiting AMD’s role in AI infrastructure. The company is set to report its fourth-quarter earnings on Tuesday, with analysts forecasting a 22% revenue surge to $7.53 billion. However, competition from Nvidia and the growing adoption of proprietary chips by Microsoft, Amazon, and Meta have raised concerns about AMD’s long-term AI growth prospects.

Tech giants are ramping up investments in in-house AI chip development, benefiting companies like Broadcom and Marvell Technology, which provide hyperscalers with custom AI processors. Broadcom expects AI to represent a $90 billion revenue opportunity by 2027, a factor that helped its stock more than double last year. Marvell saw an 83% rise, while AMD’s stock fell 18% in 2024.

Despite this shift, AMD’s AI processor sales are expected to reach up to $10 billion in 2024, double its initial forecast of $5 billion. Its data center chip segment, projected to grow 82% to $4.15 billion in Q4, is expected to drive over half of total revenue. Meanwhile, its personal computer division is forecasted to rise 33% to $1.94 billion, as AMD continues to gain market share from Intel.

Supply chain constraints remain a challenge, with TSMC working to expand production capacity for AI chip packaging. However, Nvidia’s ramp-up of its latest “Blackwell” AI chips could limit AMD’s ability to secure additional manufacturing resources.

Despite these hurdles, AMD’s fourth-quarter net income is set to rise by more than 61% to $1.08 billion, reflecting strong demand for its products.

 

Trump and Nvidia CEO Discuss DeepSeek and AI Chip Export Restrictions

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U.S. President Donald Trump and Nvidia CEO Jensen Huang held a meeting at the White House on Friday to discuss the rise of China’s DeepSeek and potential restrictions on AI chip exports. The discussions centered around the growing competition from DeepSeek, a Chinese AI company that recently launched an advanced model, which is seen as a challenge to U.S. technological dominance. DeepSeek’s performance has raised alarms, prompting concerns about China’s progress in AI, with the company’s app becoming a global sensation within days of its launch. The meeting also covered tightening restrictions on Nvidia’s AI chip exports, particularly its H20 model, to China. U.S. lawmakers have called for further scrutiny of AI chip sales to China, and the Commerce Department is investigating whether DeepSeek has used restricted U.S. chips.

Intel Stock Rises on Revenue Beat as CEO Search Takes Center Stage

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Intel shares climbed 1.7% in premarket trading on Friday following better-than-expected quarterly revenue, despite the company’s ongoing struggles in the AI-driven chip market. Investors remain focused on Intel’s search for a new CEO after the abrupt departure of Pat Gelsinger, whose four-year turnaround plan was cut short amid persistent challenges.

While Intel’s revenue exceeded modest expectations, its forecast for the current quarter fell below estimates. Analysts at Bernstein noted that investors have become “numb” to Intel’s struggles, suggesting that leadership changes are now the primary concern rather than financial performance.

The company has appointed CFO David Zinsner and senior executive Michelle Johnston Holthaus as interim co-CEOs while the board seeks a long-term replacement. Meanwhile, Intel continues to lose market share to competitors like Advanced Micro Devices (AMD), particularly in the AI sector, where it missed key investment opportunities, including OpenAI.

With AI chip demand soaring, companies are prioritizing specialized processors over traditional server chips, further limiting Intel’s growth. Analysts at Jefferies remain skeptical about Intel’s ability to turn things around, citing its struggling foundry business and lack of major customers.

Despite these challenges, Intel’s stock has fallen 60% over the past year, while AI chip leader Nvidia has surged 171%. As the CEO search progresses, investors will be looking for a strategic vision that can help Intel regain its competitive edge.