AMD CEO Lisa Su says GPU and CPU sales are nearly equal. Wall Street thinks that's not enough.
- AMD's GPU sales are nearing CPU sales, driven by AI data center demand.
- AMD raised its 2024 GPU sales forecast to over $5 billion, up from $4.5 billion.
If the central processing unit was the engine of the first age of computing, the graphics processing unit will fuel the next — at least according to CEOs like AMD's Lisa Su.
"We're actually seeing now our GPU business really approaching the scale of our CPU business," Su said on the company's third-quarter earnings call Tuesday.
AMD came up against sky-high investor expectations for AI infrastructure growth, along with quick trigger fingers if there's any indication that demand is slowing. AMD adjusted its expectations for GPU sales for data centers in 2024 up from July's $4.5 billion forecast to $5 billion or more. More than $1.5 billion of that came in the third quarter, Su said. At the start of the year, the company expected annual GPU data center sales to be more like $2 billion.
The growing parity between CPU and GPU for AMD is a new dynamic and reading into it isn't necessarily straightforward.
It reflects the growing importance of GPUs in the computing world, but it may also point to weakness in the CPU market. Multiple Wall Street analysts expect data center CPU spending to cool down somewhat in the first quarter, which could give GPUs a larger share of a smaller pie. Still, the balance of CPUs to GPUs speaks to the progress in building out AI data centers and the investment going into the space.
Bank of America estimates that AMD has about 5% of the AI chip market and that demand will grow 50% to 100% next year. So AMD could register significant growth even without making a dent in Nvidia's lead.
Analysts don't expect GPU sales to overtake CPUs even as AI matures since inference workloads — the kind that generates the outputs from AI models and products — run best on a combination of the CPUs and GPUs.
"We think that AMD's current revenue is mostly coming from inference applications, which would put their inference market share at above 10%, which seems a high bar, given a relatively small customer set," Morgan Stanley analysts wrote after the Tuesday call.
What could also keep this dynamic from becoming permanent is the immaturity of the ecosystem around AMD GPUs. Software and robust developer communities take time to build out and AMD is just one year into its AI journey — whereas Nvidia has been building its software stack on top of the CUDA framework for 18 years.
UBS analysts warned that 2025 may be yet another transition year in which AI data centers and GPU sales don't reach maturity — predicting higher GPU sales in 2026 than in 2025. Morgan Stanley analysts agreed calling 2025 another "investment year." The analysts expect $5 billion in GPU sales this year to reach around $8 billion next year.
AMD's share price dropped more than 10% Wednesday.
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