Wall Street may not agree, but AMD's AI business will soar (Part-2) .

Nvidia dominates the AI chip industry with around 80% dominance. AMD is anticipated to capture 15%–25% of the AI chip market in 2024. However, several variables might help AMD gain market share in AI chips.

AMD may buy a large amount of Taiwan Semiconductor Manufacturing's sophisticated packaging capability to create more AI chips, according to DigiTimes.

AMD may have half of TSMC's advanced packaging capacity in 2024, according to the Taiwanese daily. AMD may control a third of TSMC's AI chip production if that's true.

Second, AMD might cover the AI chip supply gap if it produces enough this year. Nvidia's AI processors apparently have a 9–12-month wait. AMD's flagship MI300X CPU can compete with Nvidia's, thus users searching for rapid AI gear may choose AMD.

Raymond James analyst Srini Pajjuri expects AMD to supply 250,000–500,000 MI300 Instinct data center CPUs this year. AMD hasn't announced the pricing of its latest AI chips, but it may have priced them inexpensively to compete with Nvidia's flagship H100 processor, which costs between $25,000 and $40,000 depending on configuration.

Raymond James estimates that AMD could earn $6.25 billion from this market if it sells 250,000 H100 AI processors at $25,000, the lowest end of its pricing range. AMD's data center GPU sales might reach $12.5 billion based on Raymond James' increased shipping projection.

AMD may have played it safe with its AI-related revenue projection for the year. As it gets more supply and more client commitments to install its AI processors, the business may raise its AI revenue guidance during the year.

AMD's 2023 revenue fell 4% to $22.7 billion. Only $400 million came from AI chip sales. Given the huge increase in AI revenue, AMD may be able to expand faster than Wall Street expects this year, which may help this tech company maintain its climb.