Shares of Advanced Micro Devices (AMD 0.50%) climbed 9.9% on Thursday after the chipmaker launched a line of new large accelerated processing units (APUs) designed to handle AI workloads that could rival similar offerings from Nvidia (NVDA -1.68%).

AMD "could get a nice piece" of the AI chip market

At the company's "Advancing AI" event yesterday, Advanced Micro's CEO Lisa Su introduced the previously announced Instinct MI300X APUs, which are designed for artificial-intelligence (AI)-oriented servers. They combine the power of the company's graphics processing units (GPUs) and central processing units (CPUs). Su added that both Microsoft and Meta have already committed to using the chip.

Nvidia currently dominates the industry, with an estimated 80% market share in AI chips.

Su admitted as much in her presentation yesterday, but also noted that AMD believes it "could get a nice piece" of what should be a more than $400 billion market opportunity in AI chips by 2027 -- twice as large as the company had previously forecasted. With a market that large, AMD doesn't necessarily need to beat Nvidia, as there should be room for multiple chip stocks to win as the space grows.

What's next for AMD investors?

In a note to clients early Thursday morning, analysts at Citi estimated AMD could command around 10% of the total AI chip market after it starts shipping its new AI-centric products, starting in 2024.

For perspective, consensus estimates on Wall Street currently predict AMD's revenue will decline a modest 4% in 2023 to under $23 billion. By comparison, Nvidia's revenue this fiscal year is expected to more than double, to nearly $59 billion.

Commanding even a 10% piece of the fast-growing AI chip market represents a massive opportunity for AMD to reaccelerate its growth. The stock is responding in kind today.