AMD's Upcoming 'Advancing AI' Event

AMD (NASDAQ:AMD) is set to host its "Advancing AI" event this week, with analysts anticipating new product announcements that may boost sales and the chipmaker’s stock price.

Analysts from Lynx Equity Strategies predict this will be a "fade-the-news event."

> "AMD stock has seen a modest run-up recently, fueled by investor optimism about MI325X. We fear investors may be disappointed," they said.

Lynx's team casts doubt on AMD's capability to compete with Nvidia (NASDAQ:NVDA), which continues to dominate the market. Despite AMD's ambitious claims during the MI300X launch nearly a year ago, minimal progress has been made in challenging Nvidia’s stronghold.

> "We do not expect MI325X to change the narrative meaningfully," concluded the analysts, who suggest that AMD will likely "remain a distant second" to its competitor.

While highlights of the event will include developments in data center CPUs and AI PCs, Lynx believes investor attention will focus on the MI-series. They warned that without clear market share gains, AMD's stock may revisit its yearly lows.

After AMD’s Computex presentation a few months ago, there was some optimism surrounding the company’s next-gen data center GPUs, especially with the MI325X offering higher HBM density—288GB compared to NVIDIA's 141GB on the H200.

However, Lynx notes weak customer traction since then. Although AMD management may boast better benchmark results than NVIDIA’s Hopper series, analysts remain skeptical, asserting that "in real workloads, we think MI300X continues to trail NVDA’s H100."

> "We do not expect MI325X to change the narrative meaningfully. Superior HBM density is just one factor; software stack, networking, and power consumption are also critical," the analysts added.

They believe AMD is banking on MI325X's success, expanding chip-on-wafer-on-substrate (CoWoS) capacity for anticipated demand. Notably, Broadcom Inc (NASDAQ:AVGO)’s strong guidance for its ethernet connectivity business at GPU-based AI data centers next year may signal growing demand for AMD AI servers. Microsoft (NASDAQ:MSFT) appears to be a key client, though Lynx expresses uncertainty about other key players.

Adding to the unpredictability, Meta Platforms (NASDAQ:META), which previously supported AMD’s MI300X launch, may have reduced its commitment to AMD recently.

> "We believe META might have solidified plans for internal silicon as an alternative to NVDA. We also doubt AWS sees AMD as a viable competitor to NVDA," Lynx explained.

Other potential customers like Oracle (NYSE:ORCL) and enterprise interest exist, but the MI-series, along with its software stack, may not be as straightforward as AMD has suggested.

> "Outside of MSFT, we do not believe clients will invest resources to close the gap since payoffs are unclear," insisted the analysts.

They predict AMD's stock will likely drop after the event, possibly revisiting this year's lows.

Regarding surprises during the event, Lynx speculates that while companies like Amazon (NASDAQ:AMZN) or Google (NASDAQ:GOOGL) could be introduced as new customers, these would likely pertain to external cloud instances.