When it comes to technology stocks, one of the most important considerations is innovation. On that front, Advanced Micro Devices (AMD +4.09%) is set to launch one of the most important chips in its history in the second half of this year: Its MI450 graphics processing unit (GPU).
It's no secret that AMD is the distant No. 2 player behind Nvidia in the GPU space. However, the MI450 will be its most advanced chip ever and is designed to compete with Nvidia's upcoming Rubin architecture. The chips will feature 432 GB of HBM4 (high-bandwidth memory) and 19.6 TB/s of memory bandwidth, both about 1.5 times that of Nvidia's Rubin GPUs. AMD has already compared its MI450 GPUs to the breakthrough it achieved with consumer CPUs in 2021, when it finally surpassed Intel in this area.
The chips are also a major component of AMD's new Helios AI rack design. It will be the company's first rack-scale design for AI workloads. It will also include its EPYC central processing units (CPUs) and Pensando data processing units (DPUs), and use open networking standards.
Image source: The Motley Fool.
AMD has multiple high-end customers lined up
Importantly, AMD already has customers lined up for these new chips. It signed partnerships with both OpenAI and Meta Platforms to deliver them up to 6 gigawatts of GPUs, starting with its MI450 GPUs. Given the size of these deployments, both companies will also have to integrate AMD's ROCm software platform into their ecosystems. This is a big step, given how badly the company has previously lagged behind Nvidia's CUDA on the software front. However, it's made great strides in this area and benefits from a shift toward more developers using open-source AI frameworks.
While AMD has issued warrants for up to 10% of the company with these deals (10% each), it cracks the door open for it to get meaningful traction with these new GPUs with two of the biggest spenders on AI infrastructure. AMD's share price also needs to hit certain thresholds for the warrants to vest, so it also incentivizes OpenAI and Meta to help AMD succeed. Oracle is also set to deploy 50,000 of AMD's MI450 GPUs in a Helios rack system later this year. AMD's earlier acquisition of ZT Systems gave it the ability to design these large-scale, turnkey racks, and lets it compete more directly with Nvidia's NVL72 clusters.
NASDAQ: AMD
Key Data Points
Time to buy AMD stock?
The introduction of the MI450 GPUs is when everything could finally fall in place for AMD. ROCm is greatly improved, it now has a rack system offering, and the specs for its chips look great on paper. If these chips can deliver strong real-world performance, the stock has a lot of upside from here.
