AMD share gain against Nvidia in AI accelerator market is 'effectively zero'

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AMD share gain against Nvidia in AI accelerator market is 'effectively zero' - BofA

Published May 23, 2023 09:08

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AMD share gain against Nvidia in AI accelerator market is 'effectively zero' - BofA

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BofA analysts raised the firm's price target on Advanced Micro Devices Inc (NASDAQ:AMD) to $120 from $105, maintaining a Neutral rating on the stock in a note to clients Tuesday.

The analysts told investors in a note that AMD is on the verge of another large opportunity in the AI accelerator market.

"AMD is on the verge of another large opportunity in the $80bn AI accelerator market (by CY27E) where AMD's share is again effectively zero against leader Nvidia (NASDAQ:NVDA)," they said.

BofA forecasts AMD's share in the AI accelerator market to remain constrained in the 2% to 3% range. "While strong growth, our forecast implies AI accelerators will be <3% of AMD total $27bn+ sales even by CY25E," the analysts added.

"AI acceleration is a large market which we est. at $16bn in CY23E potentially growing to $80bn by CY27E. However, it is dominated by two large incumbents: 1) NVDA with 70-75% share, offering the widest product breadth and full-stack solution (300 acceleration libraries, 400 AI models) with 10+ years of software/developer ecosystem and incumbency in public cloud; and 2) AVGO-led custom chip solutions at 10-15% share for Google (TPU), Meta and others."

The analysts believe that none of the larger incumbents is stumbling in AI yet, making it tougher for AMD to create its distinct lane.

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