AMD Could Double Its Artificial Intelligence Segment Revenue Annually Over the Next Three Years

Northland Capital Markets Predicts Slower Growth in Artificial Intelligence Components Market

Representatives of Northland Capital Markets have begun the week with a conflicting forecast about the future development of the artificial intelligence components market. According to their analysis, the total capacity of such components will reach $125 billion by 2027 in comparison to last year’s figure of $45-50 billion. They also predict that AMD, a major player in the market, will double its revenue each year.

However, analysts are also urging investors to temper their revenue growth expectations for market participants of AI components. It appears that some clients of NVIDIA, who order computing accelerators in large quantities beyond their real needs, distort the current picture. These buying patterns are a result of existing deficit and supplier production capacity limits. From this viewpoint, Northland Capital Markets analysts find the market capacity estimate of $400 billion for AI systems components to be excessively high. Moreover, they believe that sanctions against China will somehow decrease the demand for computing accelerators, thus reducing the capacity of the global market.

Northland Capital Markets experts claim that over the past twenty years, revenue in the semiconductor sector has grown by 6% annually. Hence, there’s no reason to anticipate accelerated growth beyond the artificial intelligence sector in the coming years. This means AMD, in particular, is expected to quadruple their revenue from AI system components, from $2 billion to $16 billion between 2024 to 2027. This would increase their total revenue to $45 billion by 2027. In the AI components market, the company is likely to hold around 13% share, similar to its current share in the central processors market where Intel is its primary competitor. In the AI accelerators segment, NVIDIA is expected to maintain a dominant position. The report suggests that AMD’s current stock quotes already take into account this potential, seeing no basis for accelerated growth. Following the publication of this forecast, AMD’s stock price fell 3.5% to $168.18.