AMD’s stock has seen a 5% decline over the past five days, with a 19% drop since the start of 2024, trailing behind the S&P 500’s 27% gain.
The recent sell-off is partly due to DeepSeek’s launch, which has raised concerns about its impact on the GPU market.
DeepSeek, a Chinese AI startup, emphasizes software-driven optimization rather than hardware dependency, significantly reducing the need for expensive GPUs to run AI tasks.
DeepSeek claims to have trained its V3 model for just $5.5 million, a fraction of the costs incurred by other companies like OpenAI. This shift could potentially reduce demand for GPUs, hurting Nvidia and AMD, especially as DeepSeek’s open-source model might encourage other companies to follow suit.
In addition, Intel’s recent price cuts on its Granite Rapids server chips have further challenged AMD, offering performance on par with AMD’s processors at a more affordable price point.
AMD’s Position: Room for Optimism?
Despite the challenges, there’s still hope for AMD. While Nvidia has dominated the AI market, DeepSeek’s lower computing power needs could allow AMD’s affordable GPUs to gain traction, offering a competitive price-to-performance trade-off.
Furthermore, AMD’s dual expertise in both CPUs and GPUs positions it well to deliver integrated systems for AI workloads.
Trefis remains positive on AMD, with a $160 per share valuation, which is 35% higher than its current market price. AMD’s 26% projected revenue growth in 2025 adds to the optimistic outlook, as the company continues to innovate in the AI and semiconductor markets.
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