Shares of chip manufacturers AMD and Nvidia reached unprecedented highs on Thursday, propelled by the ever-increasing demand for chips that power artificial intelligence (AI). AMD’s stock surged over 1% during trading to achieve its highest-ever closing price of $162.67, while Nvidia experienced a similar boost of just under 2% to reach $571.07. Both companies have witnessed substantial gains since the start of the year, following a remarkable 2023 during which AMD’s shares soared by 127.6% and Nvidia’s stock skyrocketed by 238.8%. These record-breaking valuations are a testament to the sustained interest from investors and their eagerness to invest in companies that design and supply graphics processors for AI applications.
Initially created for gaming purposes, graphics processing units (GPUs) have now evolved into a crucial component for training and deploying complex AI models such as OpenAI’s GPT. Consequently, there has been an immense surge in sales for these chips, driving the current demand. Over the past two years, Nvidia has been the leading GPU supplier to AI companies, firmly establishing its position. Nevertheless, a promising contender is AMD, which falls second in line as a standalone GPU manufacturer. AMD made significant strides by introducing a new chip last year, capable of competing with Nvidia’s H100, the current AI industry standard. Furthermore, industry analysts anticipate that AMD will continue to enhance its AI software, eradicating one of the key reasons that favored Nvidia over AMD’s offerings.
Adding to the positive sentiment, Taiwan Semiconductor Manufacturing Company (TSMC), responsible for manufacturing chips for both AMD and Nvidia, reported better-than-expected sales on Thursday. CEO C.C. Wei revealed an upsurge in demand for AI chips, which necessitate the implementation of the most advanced manufacturing techniques. TSMC’s management envisions that AI chip manufacturing may comprise a “high-teens” percentage of its revenue within five years, leading Goldman Sachs analysts, led by Toshiya Hari, to note that this outlook is favorable for both Nvidia and AMD.
Meta’s Ambitious Plans
In a separate development, Mark Zuckerberg, the CEO of Meta, disclosed plans on Thursday to procure billions of dollars’ worth of GPUs, including Nvidia’s products, throughout the year. As one of the major buyers in the market, Meta’s substantial investment further augments the already thriving demand for GPUs in AI applications.
The skyrocketing valuations of AMD and Nvidia reflect the growing enthusiasm among investors for companies at the forefront of AI chip development. The rapid expansion of AI applications and the surging demand for GPUs to power these models have propelled both manufacturers to all-time highs. While Nvidia has been the dominant player thus far, AMD’s emergence as a formidable competitor and TSMC’s optimistic outlook bode well for the future of both companies. As the AI market continues to evolve and expand, the importance of these GPU manufacturers in fueling innovation cannot be understated.
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