This article first appeared on GuruFocus.
Advanced Micro Devices (NASDAQ:AMD), the chip heavyweight chasing Nvidia (NASDAQ:NVDA) across AI accelerators and server processors, slid approximately 0.4% to $464.20 Thursday afternoon. The message rattling investors was simple: Google and other hyperscalers are not content to keep buying expensive general-purpose chips. They want more silicon built in-house and tuned for specific workloads.
Marvell’s (NASDAQ:MRVL) warrants can fully vest if qualifying Google (NASDAQ:GOOG) purchases climb to approximately $120 billion through fiscal 2033. That is not a guaranteed spending commitment, but it is still an enormous flashing signal. AMD is no longer fighting only Nvidia’s dominant GPU ecosystem. It must also battle the same cloud giants it wants as customers as they pour billions into their own custom AI chips.
AMD’s second-quarter revenue hit $11.5 billion, including approximately $6.7 billion from data centers, while its multiyear OpenAI agreement could eventually give OpenAI an option to acquire roughly 10% of the company. The opportunity is massive, but so is the expectation.
At $464.20, the stock sits 70.38% above its $272.45 GF Value estimate and trades near 119 times earnings. AMD must now turn Instinct into a full-blown AI powerhousenot merely another promising Nvidia alternative.
