AMD expects data center chip market to grow to $1 trillion by 2030

Advanced Micro Devices (AMD) is projecting significant growth in the data center chip market, estimating it will reach $1 trillion by 2030, according to CEO Lisa Su during the company's analyst day presentation. A considerable portion of this growth is expected to be driven by advancements in artificial intelligence (AI), which encompass AMD's central processing units, networking chips, and specialized AI chips. Su expressed enthusiasm about the potential within the data center market, stating, "It's an exciting market. There's no question, data center is the largest growth opportunity out there, and one that AMD is very, very well positioned for." The company is striving to enhance its AI business, especially as it faces stiff competition from Nvidia, which has been rapidly increasing its share of the data center chip market. Historically, AMD has made strides in the CPU sector, consistently gaining ground against Intel. Meanwhile, Nvidia's CEO Jensen Huang has forecasted that the overall AI infrastructure market could balloon to between $3 trillion to $4 trillion by 2030. Looking ahead, AMD plans to launch its next-generation MI400 series of AI chips in 2026, which will feature various models aimed at scientific applications and generative AI technologies. In addition to these chips, AMD is gearing up to introduce a complete server rack, akin to Nvidia's GB200 NVL72 product. During her opening remarks, Su emphasized the importance of recent acquisitions related to AI, such as the server builder ZT Systems and several smaller software firms. AMD has effectively created what Su referred to as "an M&A machine," acquiring startups that develop essential software for AI applications. Recently, AMD announced its acquisition of MK1, highlighting its strategy to secure the software and talent necessary to bolster its AI capabilities, as noted by Chief Strategy Officer Mat Hein in a Reuters interview. Hein stated, "We'll continue to do AI software tuck-ins," indicating a commitment to expanding their AI software portfolio. Last week, the company also projected fourth-quarter revenues that surpassed Wall Street expectations, driven by increased demand for AI chips, contributing to a positive outlook for the rest of the year. Despite the optimism, AMD shares experienced a decline of 2.3%, trading at $238.31 late Tuesday afternoon. In a notable partnership, AMD signed a multiyear agreement with OpenAI in October, which is expected to generate over $100 billion in new revenue over four years from OpenAI and other clients. As part of this deal, OpenAI will receive warrants to acquire up to a 10% stake in AMD, marking a significant collaboration for the company as it seeks to capitalize on the booming AI market.