AMD Shares Surge Over 7% After Raising AI Market Forecast to $2 Trillion

Shares of Advanced Micro Devices (NASDAQ: AMD) jumped more than 7% on Tuesday after company management presented an aggressive growth strategy for artificial intelligence at the Citi Global TMT Conference. The chipmaker significantly raised its forecast for the AI total addressable market (TAM), now projecting it to reach $2 trillion by 2030.

A Shift to AI Inference

At the core of AMD's strategy is a fundamental shift in the AI landscape, with computing demand moving rapidly from training large models to inference—the process of executing already-trained models. According to a summary of the conference by Citi, AMD management noted that inference has become the "primary driver of AI compute demand growth" over the past year.

The company sees workloads evolving from basic chatbots to more complex, autonomous agent-based AI systems. To capitalize on this trend, AMD projects its data center business will more than double in the next year.

Strong Demand and Product Pipeline

AMD is seeing robust demand for its hardware, which is expected to support its growth ambitions. The company's complex rack-scale system, Helios, has secured Meta Platforms and two other unnamed AI labs as core customers, with their demand forecasts reportedly exceeding initial purchase agreements.

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Key growth drivers and product updates include:

• The next-generation MI450 AI accelerator is set to be released this quarter, with volume shipments ramping up in the fourth quarter and continuing through 2027.
• The server CPU business is expected to grow over 80% year-over-year in the second half of this year and more than 70% next year.
• AMD is also tapping into new demand from emerging "neo-cloud" service providers.

Future Outlook

While the data center GPU business currently operates at a lower margin than AMD's corporate average, strong double-digit growth in its high-margin server and embedded businesses is helping to support overall profitability. Looking ahead, management expressed confidence in sustained demand and revealed it is in deep technical collaboration with three core customers on its next-generation MI500 and MI600 chips.

AMD also disclosed a partnership with Cerebras and alluded to unannounced internal projects aimed at capturing more of the low-latency inference market.