2 very big numbers AMD stock investors need to watch on October 29th

Nvidia (NASDAQ:NVDA) is the leading provider of data center graphics processing units (GPUs) that developers use to train and infer artificial intelligence (AI) models. The company’s CEO, Jensen Huang, expects data center operators to spend $1 trillion over the next five years building AI infrastructure, representing an incredibly valuable opportunity.

Nvidia had an estimated 98% share of the data center GPU market last year, but competition is increasing Advanced micro devices (NASDAQ:AMD) could be one of the biggest threats to the company.

AMD is becoming a versatile AI chip company

AMD’s chips power some of the world’s most popular consumer electronics devices SonyPlayStation 5 to the infotainment systems in TeslaElectric vehicles. AMD’s GPUs, CPUs (Central Processing Units) and NPUs (Neural Processing Units) are also very popular among personal computer manufacturers.

In fact, the company’s latest Ryzen AI 300 series NPUs are set to power more than 100 computing platforms from manufacturers like… MicrosoftAsus, Lenovo and P.S. Ryzen AI chips are designed to process AI workloads on-device, reducing reliance on external data centers and enabling a faster user experience.

But as mentioned above, AMD is quickly closing in on Nvidia in the data center GPU market. AMD is scheduled to report its financial results for the third quarter of 2024 (ending September 30) on October 29th. Here are two numbers about this segment that investors need to keep an eye on.

The first number to keep an eye on: data center revenue

AMD began shipping its MI300X data center GPU late last year, which directly competes with Nvidia’s flagship H100. It has already attracted some of Nvidia’s biggest customers, including Microsoft, oracleAnd Metaplatformsand some of them bring performance and cost advantages by using the MI300X compared to the H100.

The MI300 series reached $1 billion in sales within two quarters of its launch, making it the fastest-growing product in AMD history. Of course, AI GPUs will be the driving force behind the company’s data center revenue in the future.

In the first quarter of 2024 (ended March 30), AMD generated data center revenue of $2.3 billion, an increase of 80% over the same period last year. Then, in the second quarter (ended June 29), the company reported data center revenues of $2.8 billion, a whopping 114% increase year-over-year.

Simply put, AMD’s data center revenue is increasing, and investors should expect that trend to continue in the third quarter. If this is the case, it would be a very positive sign that the MI300 is gaining market share. Since the data center segment now accounts for nearly half of the company’s total revenue, it will be the focus of the upcoming Q3 report.

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The second number to keep an eye on: data center GPU sales forecast

The MI300X was just the beginning of AMD’s foray into AI GPUs for data centers. At the company’s Advancing AI event earlier this month, CEO Lisa Su revealed new details about the upcoming MI325X and the groundbreaking MI350X.

The MI325X GPU will ship in the first quarter of 2025 and will directly compete with Nvidia’s H200 GPU (the successor to the H100). According to Su, it has 80% more high-bandwidth memory and delivers 30% better inference performance than the H200. Therefore, even though AMD’s chips are launching several months behind Nvidia’s, the company offers a technical edge that could help attract customers.

However, AMD will soon fall behind again, as Nvidia is expected to begin shipping GPUs based on its new Blackwell architecture in the fourth quarter of fiscal 2025 (which runs from November to January). Blackwell-based GPU systems like the GB200 deliver up to 30x inference performance compared to equivalent H100 systems, providing significant cost-effectiveness improvements.

AMD is already working on a GPU architecture called CNDA (Compute DNA) 4 that can rival Blackwell. It is the basis for the upcoming MI350X GPU, which will offer up to 35 times higher performance than CDNA-3 chips like the MI300. The MI350X won’t ship until the second half of 2025, but look for updates from the company during its third-quarter earnings call with investors.

That brings me to AMD’s GPU sales forecast. The company at the start of 2024 expected to sell $3.5 billion of data center GPUs this year, but revised that estimate upward in both the first and second quarters to now stand at $4. $5 billion. A further upward correction would suggest that demand for the MI300 is still increasing, which would be further evidence that a growing number of customers are viewing AMD as a viable alternative to Nvidia.

Additionally, increasing demand for the MI300 bodes well for MI325X and MI350X sales in 2025, and with the stock market being a forward-looking machine, that would be good news for AMD stock heading into the new year.

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Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, HP, Meta Platforms, Microsoft, Nvidia, Oracle and Tesla. The Motley Fool recommends the following options: long $395 January 2026 calls on Microsoft and short $405 January 2026 calls on Microsoft. The Motley Fool has a disclosure policy.

“2 Very Big Numbers AMD Stock Investors Need to Watch on October 29” was originally published by The Motley Fool