Demand for Advanced Chips is Growing

According to AMD CEO Lisa Su, the company has experienced a notable increase in demand for its advanced chips in the last two to three months.

Su shared these insights during an interview with CNBC's "Squawk on the Street." She emphasized that AI technology is evolving rapidly, stating, "AI is accelerating at a pace that I would not have imagined," and noted that demand continues to surpass compute needs.

Stock Performance Following Earnings Report

Despite the positive news about demand, AMD's shares dropped 13% on Wednesday after the company released its fourth-quarter results.

While the results exceeded Wall Street's expectations, some analysts perceived the company's outlook as weak, overshadowing the positive earnings report.

Revenue Expectations Exceed Analyst Predictions

AMD projects first-quarter revenue of $9.8 billion, with a possible variance of plus or minus $300 million. This forecast is notably higher than analysts' expectations of $9.38 billion.

Su's comments suggest that the strong outlook is backed by increased spending on AI and the construction of data centers.

Accelerating Datacenter Business

Su highlighted that AMD's datacenter business has seen a marked acceleration from the fourth quarter to the first quarter.

This growth is largely driven by the rising demand for central processing units as businesses invest in computing power for AI applications. Su mentioned that AMD's CPUs are "going gangbusters" as companies ramp up their computing capabilities.

Looking Ahead: Launch of Helios AI System

Looking towards the future, Su indicated that AMD is on track to launch its new integrated server-scale AI system, known as Helios, in the second half of the year.

The company hopes this new product will further enhance its position in the growing AI market.

Challenges and Previous Partnerships

AMD is navigating a challenging period, having set a high bar for itself following several significant partnerships in the previous quarter.

Notably, the company formed collaborations with OpenAI and Oracle, which are expected to bolster its presence in the AI sector. As the demand for datacenters continues to grow, AMD is positioned strategically to meet the needs of businesses looking to harness AI technology.

What’s Next for AMD?

As AMD prepares for the upcoming launch of Helios and continues to respond to rising demand, investors will be watching closely to see how the company adapts to the rapidly changing landscape of AI and computing.

With its ambitious revenue targets and focus on datacenter growth, AMD aims to solidify its place as a leader in the semiconductor industry.