The Growth Projection

AMD CEO Lisa Su laid out aggressive targets Tuesday. The company expects overall revenue to grow about 35% annually over the next three to five years, driven by what Su called "insatiable" AI chip demand.

The AI data center business will grow even faster - about 80% per year over the same period. Su said that puts AMD on track to hit tens of billions in AI chip sales by 2027.

AMD shares fell 3% in extended trading despite the optimistic forecast.

Taking on Nvidia

Su said AMD could achieve "double-digit" market share in data center AI chips within three to five years. That's a bold target considering Nvidia currently controls over 90% of the market.

Nvidia's dominance has pushed its market cap above $4.6 trillion. AMD sits at roughly $387 billion by comparison.

But AMD is the only other major GPU developer besides Nvidia, giving it a unique position as companies seek alternatives to control costs and increase capacity.

The Major Deals

AMD secured significant partnerships to support its growth ambitions. In October, the company announced a deal with OpenAI to sell billions of dollars in Instinct AI chips over multiple years.

The agreement starts with enough chips in 2026 to use 1 gigawatt of power. OpenAI could take a 10% stake in AMD as part of the deal.

Su also highlighted long-term agreements with Oracle and Meta. OpenAI is helping AMD set up next-generation systems based on its Instinct MI400X chips shipping next year.

The Technical Challenge

AMD is working to catch up with Nvidia on system integration. The company plans to assemble its chips into "rack-scale" systems where 72 chips work together as one unit.

This capability is essential for running the largest AI models. If AMD succeeds, it will match what Nvidia has offered for three product generations.

The Market Expansion

AMD now projects the total AI data center market will hit $1 trillion annually by 2030, representing 40% annual growth. That's up dramatically from the company's previous forecast of $500 billion in 2028.

The updated figure includes both GPUs and CPUs, not just pure AI accelerators. AMD reported $5 billion in AI chip sales in fiscal 2024.

Beyond AI

Su emphasized AMD's other businesses are performing well too. The company's Epyc CPUs remain its most important product by sales, competing primarily against Intel and some Arm-based processors.

"Every other part of our business is firing on all cylinders, and that's actually a very nice place to be," Su said.

The Bottom Line

AMD is betting big on capturing significant share from Nvidia's AI chip dominance with 80% annual growth targets and major deals with OpenAI, Oracle, and Meta. Whether the company can deliver on double-digit market share remains to be seen, but the partnerships provide a foundation to challenge Nvidia's stranglehold.