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AMD just had their most important earnings call ever whether you're a longtime AMD shareholder or you're just wondering if AMD can catch Nvidia you should know that this isn't just about revenues or profit margins amd's earnings call shows us their place in the entire AI Revolution so in this video I'll break down their latest earnings one key Insight that changed the way I see the company and what this all means for the future of AMD stock I'll talk about upfront amd's latest earnings their data center Instinct gpus amd's single biggest risk which is competing with Nvidia and of course whether or not I would buy AMD stock now that it's at its lowest price since 2023 but let me start by saying that I don't think AMD is a bad company or a bad investment in fact I've made video after video on how AMD is the only company on Earth with a shot at competing with Nvidia but the further we get into the AI era The Wider the gap between AMD and Nvidia seems to get and I think I figured out why let's start with amd's latest earnings call AMD posted record revenues of $7.7 billion for the quarter which is up 133% quarter over quarter and 24% year over-year that's solid overall growth but things get really interesting when we break amd's Revenue down by business unit AMD has four major business units data centers client PCS gaming and embedded chips if you've been been watching this channel for a while you know that I focus on investing in technology platforms that other businesses pay to build on top of so I'm going to focus mostly on amd's data center chips which is their biggest and fastest growing business unit anyway AMD reported $3.9 billion in data center revenues which is up a whopping 69% year-over-year that sounds great until you compare it to Nvidia nvidia's data center revenues were $3.8 billion last quarter which was up by an insane 112% year-over-year not just that but data centers represent 88% of nvidia's overall Revenue remember that number nvidia's data center revenues are 7.9 times bigger than amds and they're growing over 60% faster why is that well nvidia's gpus are the industry standard for AI training and inference at a time when Tech giants like meta Amazon Google and Microsoft are investing a combined $300 billion into AI infrastructure ructure this year alone and that's after deep seek showed the world how powerful AI models can be trained on far fewer gpus than anyone previously thought possible which is huge for investors because it means even faster AI adoption across the board let me explain what I mean somebody already got deep seek working on a Raspberry Pi and a single desktop GPU that means that large language models are no longer only for companies with tens of thousands of expensive AI chips the barrier of Entry to run large language models just went way down which means more research Labs small businesses and entirely new markets alog together will start to use AI at the same time Tech Giants are still spending tens of billions of dollars a piece to fill huge data centers with expensive chips since every dollar they spend on high-end AI Hardware now goes a lot further letting data centers support the same workloads at much higher margins or keep their margins steady on bigger workloads requiring Mass massive amounts of data and speaking of data you probably know that vpns protect you and your data by encrypting it and changing your digital location but did you know that vpns can also save you some serious money that's where surf shark comes in the sponsor of this video surf shark is a super fast and easy to use VPN that you can install on unlimited devices with just one account to protect yourself and your entire family they also have add-ons like surf shark alert which alerts you if you're email credit cards or personal information get leaked in a data breach talk about a lifesaver also many online stores raise their prices based on your location but with surf shark you can always get the best price 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CPUs which compete with Intel so if we assume that half of amd's data center revenues actually come from CPUs then nvidia's AI accelerator revenues are actually around 16 times bigger than amds and the reason that Nvidia is growing faster is 88% of their total revenue are directly tied to AI data centers compared to around 25% for AMD after accounting for that 50/50 split said another way for every dollar I put into Nvidia stock 88 cents are directly exposed to AI but for every dollar I put into AMD stock it's more like 25 or 35 cents depending on how much amd's epic CPUs actually benefit from this AI boom that's a big difference in terms of exposing my portfolio to the AI market and just to be clear clear AI is one of the only markets that matters for AMD shareholders right now PC shipments were expected to grow by 5% in 2024 and 8% in 2025 and that number includes laptops and notebooks that don't need as powerful chips around 35% of amd's total revenues come from PC CPUs gpus and gaming chips and those revenues are still lower today than they were back in 2022 compare that to the global artificial intelligence Market which that's a 30% compound annual growth rate through 2033 and the market for data center accelerators is expected to more than 4X in size by 2032 which would be a compound annual growth rate of 24% for the next 7 years that's another reason that I'm so focused on data centers and AI infrastructure last year I said that AMD could become a serious competitor to Nvidia for two key reasons first nvidia's data center chips had limited supplies and wait times reached almost a year which gave AMD a huge window to take market share from Nvidia if they could release a compelling AI solution and second nvidia's data center Solutions ran on infiniband limiting the Investments that most ethernet-based data centers could make in nvidia's ecosystem but Nvidia fixed both of those issues a while ago by ramping up the production of their Hopper and now Blackwell chips as well as releasing their Spectrum X ethernet based networking Solutions in fact around $3 billion of Nvidia data center revenues came from AI networking last quarter which is almost as much as all of amd's data center revenues today now that AMD doesn't have those two big opportunities it just comes down to how their gpus stack up against Nvidia so let's talk about that next amd's Mi 300X directly competes with nvidia's h100s which are the current industry standard the Mi 300X is designed for memory intens Ive AI workloads like running large language models with huge context windows or generating video clips when AMD released this chip they claimed it performed around 30% better than the h100s the problem is that AMD released these chips more than a year after Nvidia released the h100 which means all the biggest data centers cloud service providers and supercomputers were already starting to reserve nvidia's h200 gpus then if we fast forward to a few months ago AMD CEO Lisa Sue announced the MI 350X here's a quick look the Mi 350 series introduces our new cdna 4 architecture it features up to 288 gigb of hbm 3E memory and adds support for new fp4 and fp6 data types and again what we're thinking about is how can we get this technology to market the fastest it actually also drops into the same infrastructure as Mi 300 and Mi 325 and brings the biggest generational leap in AI performance in our history when it launches in the second half of 2025 looking at the performance cdna 4 delivers over seven times more AI compute and as we said increases both memory capacity and memory bandwidth and we've actually designed it for higher efficiency reducing things like networking overhead so that we can increase overall system performance in total cdna 4 will deliver a significant 35 times generational increase in AI performance So based on the huge leap in inference performance and the support for new data types it seems like amd's Mi 350X competes with nvidia's Blackwell gpus by the way it is worth pointing out that AMD was making $0 on these AI data center gpus a little over a year ago so building a multi-billion Dollar business that competes directly with Nvidia in just five quarters is actually an incredible achievement the problem is that amd's Mi 350X ships in the second half of 2025 while nvidia's Blackwell chips are already shipping and sold out through the rest of the year in fact analysts expect Nvidia to gain AI Hardware market share in 2025 and remember Blackwell isn't just a GPU it's an accelerated Computing platform with chips based on the Blackwell architecture making their way into robots self-driving cars and even desktop PCS not just data centers and supercomputers and by the time AMD fully ramps up the Mi 350X Nvidia could be be taking orders for their next Generation Reuben gpus we know from nvidia's investor presentations that they move to a one-year release cycle for chip architectures meaning from Hopper to Blackwell and then from Blackwell to the Reuben architecture that Jensen announced at computex last year so one of the biggest risks for AMD is that Nvidia releases new Chips almost as fast as AMD can build a competitor for the last one another big risk for AMD is spreading themselves too thin even though this video focused on Dat centers AMD makes CPUs and gpus for gaming PCs custom chips for video game consoles and has a big embedded chip business thanks to their acquisition of xlinks together these business units account for half of amd's revenues remember for every dollar I put into Nvidia stock 88 cents are exposed to AI data center infrastructure but for every dollar I put into AMD stock it's more like 25 to 35 depending on how much you believe their epic line of CPUs for servers benefit from Ai and we haven't even talked about amd's open source Rockham platform versus nvidia's Cuda ecosystem their long list of acceleration libraries and all the software platforms and AI models that Nvidia has built on top of it which I've covered in many of my other videos which leads me to another big risk for AMD The innovator's Dilemma there's no doubt that AMD makes arguably the best x86 chips on Earth and I'm not saying that x86 is going away anytime soon but most major major chip designers are leveraging the arm architecture more and more nvidia's grace CPU is arm-based Google's tensor processing units are too so are Microsoft's Cobalt chips and Amazon's graviton processors so as a shareholder I want to see AMD invest where the industry is heading and diversify their product lines to include arm chips in the future all right now that I've covered amd's latest earnings their Data Center gpus and all the risks that come with competing with Nvidia in data centers while also making products for three other low growth markets let's talk about what this all means for AMD really helps me out and i let's talk about why I took AMD off my list of stocks to get rich without getting lucky in 2025 whenever I make a list of stocks I always try to make them work together by owning big pieces of high growth markets for example I put AMD on my list back at the start of 2024 so that I would own the entire data center GPU Market but a few things became clear as the year went on first Nvidia was able to solve their biggest challenges faster than AMD could take advantage of them and second Nvidia holds around a 90% market share for data center gpus according to various industry estimates and if I can own 90% of a key AI Market with just one stock then there's no real reason to buy another and based on everything that I've learned by going to nvidia's headquarters attending their GTC conferences and interviewing their Executives I agree with the industry analysts saying that Nvidia could even gain market share in 2025 in fact I think nvidia's hold on the data center GPU Market is more like Google's hold on the search Market Google will never get disrupted by another search engine it's going to get disrupted by a generative AI based answer engine or an AI agent that will save people from manually searching through tons of websites and ads which is why Google is investing so heavily in things like Gemini and Ai overviews and by the same token I don't think Nvidia will ever get disrupted by another GPU maker they'll eventually get disrupted by a different kind of AI chip altogether maybe it's one of broadcom's as6 maybe it's a different kind of arm chip like Google's tpus or maybe it's a wafer scale chip like cerebus I have no idea but I'm willing to bet that it won't be a standard GPU on top of that AMD is spread across many different low growth markets like PCS game consoles and embedded chips only around a quarter of amd's revenues come from AI accelerators today and nvidia's data center revenues are eight times bigger and growing significantly faster once I realize that I get way more exposure to AI for every dollar I invest in Nvidia stock than I do with AMD it really changed the way I value both of these companies and that's why I took AMD off my list for 2025 that doesn't make AMD a bad company or a bad investment it's just not a pure play on AI and that's my main focus at least for the next few years because that's where I think we'll see the biggest returns which is why it's so important to understand to get rich without getting lucky make sure to check out this video next either way thanks for watching
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