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“Against this backdrop, we are doing very well by expanding our data center business and enabling AI capabilities across our product portfolio,” Su said.
There's a lot to be excited about with AI, including money.
Related: Analyst resets AMD stock price target based on AI market outlook
According to a Bloomberg Intelligence report, the generative AI (GenAI) market is expected to grow to $1.3 trillion in value over the next decade, while AI-related hardware could reach $640 billion by 2032, up from less than $40 billion in 2022.
Market analytics firm Canalys predicted that AI-enabled PC shipments will reach 19% this year and jump to 60% by 2027, with a particular focus on the commercial sector.
Companies need all kinds of muscle to compete with their competitors, and with that in mind, AMD announced it has signed a deal to acquire Silo AI, which it says is Europe's largest private AI lab, for about $650 million in cash.
Based in Helsinki, Finland, Silo AI specializes in end-to-end AI-driven solutions that help clients integrate technology into their products and services.
AMD said the acquisition of Silo AI will improve the development and deployment of AMD-powered AI models, enabling potential customers to build complex AI models using its chips.
According to Reuters, the acquisition is the latest in a series of moves by AMD to expand its presence in the AI space.
The company acquired AI software companies Mipsology and Nod.ai last year and has invested more than $125 million in 12 AI companies in the past 12 months.
Analysts reacted positively to AMD's latest move.
Wells Fargo analyst Aaron Lakers raised his price target on AMD to $205 from $190 and maintained an overweight rating on the stock.
Related: Analysts reset Nvidia stock target as chip sector review continues
Laker believes AMD's acquisition of Silo AI is a positive tactical and strategic move focused on deepening AMD's in-house open source AI software expertise, the analyst said in a research note to investors.
Analysts point to “software's rising status”
Ross MKM raised its price target on AMD to $200 from $180 and maintained a buy recommendation on the company's stock.
The company believes that AMD's recent AI software acquisition, along with several additional acquisitions made prior to it, will accelerate the adoption of open source AI software tools and close the gap with leading proprietary AI frameworks.
Other AI strains:
Ross analysts said they believe the company's improving software position will help boost support for its Instinct AI processor family, which replaced AMD's FirePro S brand in 2016.
After AMD announced the acquisition, Stifel analysts said the set of AI tools was reminiscent of Nvidia's recently released Nemo Inference Microservices (NIM), a collection of cloud-native microservices that simplifies and accelerates the deployment of generative AI models across a variety of environments.
The company views the acquisition as a positive, seeing it as further evidence that offering an AI stack that includes different software layers can further drive competitive differentiation.
Ross maintained his buy recommendation and $200 price target on AMD shares.
TheStreet Pro's Stephen Guilfoyle recently shared his thoughts on the semiconductor sector, highlighting the strength of AMD, Nvidia and memory storage company Micron Technology (M).
“Fundamentally my thinking was to invest in high-end cloud and AI-enabled GPUs, along with the memory needed to do all the things we ask of them,” he said in a July 9 column.
“I correctly identified Nvidia as the dominant player in this space (not a difficult call) and bet that AMD would be the runner-up in this space. AMD may be number two, but the gap is much larger than I expected,” he said.
Guilfoyle said he has enjoyed investing in companies run by Lisa Su and Nvidia President and CEO Jensen Huang, saying “for many years, these two people made me seem smarter than I actually was.”
“I don't have the same warm feelings toward Sanjay Mehrotra as I do toward other CEOs because I've won and lost bets on his performance over the years,” he said of Micron's chief executive.
Related: Veteran fund manager predicts the stock world is in trouble
