Whenever a growth company in the artificial intelligence chip sector is cutting jobs, be wary. AMD (AMD), which had 26,000 employees at the end of last year, said it would cut 4% of its staff.
AMD abandoned plans to compete with Nvidia (NVDA) in the high-end gaming graphics card market. This likely resulted in part of the staff cut. To profit from the strong demand for AI accelerators in data centers, AMD has the MI300X model. Meta Platforms (META) and Microsoft (MSFT) are AMD’s notable clients.
Unfortunately, customers want the best AI hardware servers available. They want Nvidia’s Blackwell AI server instead.
Falling Behind in Competition
Both AMD and Intel (INTC) are having trouble catching up to Nvidia, where the firm has an 80% market share. Intel’s Gaudi AI server is attractively priced but falls behind Nvidia’s latest offering.
In the desktop CPU market, AMD is solidifying the high-end market. After a failed launch of the 9000 series chips, it successfully launched the 9800x3D. This chip has -X3D, which is a cutting-edge 3D V-Cashe. As a result, the latest chip is over 20% faster than the previous generation AMD 7800x3D.
AMD stock is more likely to underperform. Momentum traders are flocking to NVDA stock instead.
