Latest news with #TPUs
Forbes
4 days ago
- Business
- Forbes
How AMD Stock Falls To $80
AMD stock (NASDAQ:AMD) has had a strong run this year so far, rising nearly 35% since early January, driven by recovering CPU demand and investor enthusiasm around generative AI. But with the stock now trading at a lofty 42x forward earnings, investors may want to pause and ask: how much of this valuation is justified, and how much is riding on high expectations? Here's the thing, a 50% drawdown from current levels would not be unprecedented. It happened in 2022, when AMD stock lost over 60% of its value in just a few quarters. With the stock now around $163, a return to $80 levels isn't out of the question. And after a mixed Q2 earnings report and mounting macroeconomic pressures - including tariffs under President Donald Trump - a reality check may be in order. See our counter scenario on AMD Stock upside to $330. Indeed, we believe this broad range of upside and downside potential represents a simple fact, that AMD is a pretty volatile stock. Valuation Rests on AI Hope. But Are Things Going To Plan? A key driver of AMD's premium valuation is its potential in the AI chip space. However, Q2 revenues from the company's data center division, which houses its AI accelerator business, fell short of expectations with revenue rising just 14% to $3.2 billion. What's worse - AI chip sales appear to have declined year-over-year, held back by export restrictions to China and a pause as customers await the next-gen Instinct MI350. Compare this with Nvidia, which reported over 70% growth in its data center business to $39 billion last quarter. AMD's AI efforts remain a distant second, and it may be missing out on a significant chunk of the capital pouring into generative AI infrastructure. Should you buy or fear AMD stock? For perspective, Amazon, Meta, Microsoft, and Alphabet together spent roughly $222 billion in capex in 2024, projected to surge to $360 billion in 2025. AMD's inability to capture a larger share of that spend raises concerns about whether its AI narrative can continue to support such a high multiple. There are some positives as well. The Trump administration recently eased restrictions on AMD's MI308 chip shipments to China, which could provide a near-term revenue boost. However, Nvidia's entrenched position - bolstered by its proprietary CUDA software ecosystem - makes customer switching harder and limits AMD's upside. AI Spending Sustainability, Competition There are also broader risks to the AI story. Despite massive infrastructure spending, most companies have yet to figure out compelling monetization models for AI. Shareholder pressure could eventually mount to improve returns, and this could cause tech giants may slow their GPU spending. Meanwhile, many of the big tech companies are building their own custom AI chips. Google has its TPUs, Microsoft is rolling out Maia, Amazon has Trainium and Inferentia, and Meta is building in-house silicon optimized for its own AI workloads. These in-house efforts could reduce dependency on AMD (and Nvidia), and could meaningfully reduce their addressable market. Even if the GPU story stumbles, could AMD fall back on CPUs? Not without challenges. AMD's bread-and-butter PC and server CPU businesses could face pressure as the U.S. economy softens. Inflation remains elevated, job growth is moderating, and President Trump's new tariffs on key trading partners risk driving up costs, dampening consumer spending and business investment alike. That could impact PC sales and in turn hit CPU revenues. How resilient is AMD stock during a downturn? AMD stock has fared worse than the benchmark S&P 500 index during some of the recent downturns. Worried about the impact of a market crash on AMD stock? Our dashboard AMD Dropped 6.4% In A Day. Have You Fully Evaluated The Risk? has a detailed analysis of how the stock performed during and after previous market crashes. Inflation Shock (2022) • AMD stock fell 65.4% from a high of $161.91 on 29 November 2021 to $55.94 on 14 October 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500 • The stock fully recovered to its pre-Crisis peak by 18 January 2024 • Since then, the stock has increased to a high of $211.38 on 7 March 2024 and currently trades at around $163. Covid Pandemic (2020) • AMD stock fell 34.3% from a high of $58.90 on 19 February 2020 to $38.71 on 16 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500 • The stock fully recovered to its pre-Crisis peak by 22 July 2020 Global Financial Crisis (2008) • AMD stock fell 91.2% from a high of $20.35 on 1 January 2007 to $1.80 on 25 November 2008, vs. a peak-to-trough decline of 56.8% for the S&P 500 • The stock fully recovered to its pre-Crisis peak by 21 August 2018 Premium Valuation In summary, it also doesn't help that AMD stock is still expensive; it trades at almost 49x trailing earnings and 42x forward earnings. Sure, Advanced Micro Devices' Revenues have grown considerably over recent years, rising at an average rate of about 15% over the last 3 years (vs. 5% for S&P 500). However, this growth could fade quickly if the economy takes a turn for the worse and if the company fails to meaningfully capture share of the AI chip market. At current multiples, even modest disappointments could trigger an outsized correction in the stock. The rich valuation of AMD stock limits its upside potential in the near-to-mid term. As an alternative, the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid- and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.
CNA
27-06-2025
- Business
- CNA
OpenAI turns to Google's AI chips to power its products, The Information reports
OpenAI has recently begun renting Google's artificial intelligence chips to power ChatGPT and other products, The Information reported on Friday, citing a person involved in the arrangement. The move, which marks the first time OpenAI has used non-Nvidia chips in a meaningful way, shows the Sam Altman-led company's shift away from relying on backer Microsoft's data centers, potentially boosting Google's tensor processing units (TPUs) as a cheaper alternative to Nvidia's graphics processing units (GPUs), the report said. As one of the largest purchasers of Nvidia's GPUs, OpenAI uses AI chips to train models and also for inference computing, a process in which an AI model uses its trained knowledge to make predictions or decisions based on new information. OpenAI hopes the TPUs, which it rents through Google Cloud, will help lower the cost of inference, according to the report. However, Google, an OpenAI competitor in the AI race, is not renting its most powerful TPUs to its rival, The Information said, citing a Google Cloud employee. Both OpenAI and Google did not immediately respond to Reuters requests for comment. OpenAI planned to add Google Cloud service to meet its growing needs for computing capacity, Reuters had exclusively reported earlier this month, marking a surprising collaboration between two prominent competitors in the AI sector. For Google, the deal comes as it is expanding external availability of its in-house TPUs, which were historically reserved for internal use. That helped Google win customers including Big Tech player Apple as well as startups like Anthropic and Safe Superintelligence, two OpenAI competitors launched by former OpenAI leaders.
Yahoo
27-06-2025
- Business
- Yahoo
OpenAI turns to Google's AI chips to power its products, The Information reports
(Reuters) -OpenAI has recently begun renting Google's artificial intelligence chips to power ChatGPT and other products, The Information reported on Friday, citing a person involved in the arrangement. The move, which marks the first time OpenAI has used non-Nvidia chips in a meaningful way, shows the Sam Altman-led company's shift away from relying on backer Microsoft's data centers, potentially boosting Google's tensor processing units (TPUs) as a cheaper alternative to Nvidia's graphics processing units (GPUs), the report said. As one of the largest purchasers of Nvidia's GPUs, OpenAI uses AI chips to train models and also for inference computing, a process in which an AI model uses its trained knowledge to make predictions or decisions based on new information. OpenAI hopes the TPUs, which it rents through Google Cloud, will help lower the cost of inference, according to the report. However, Google, an OpenAI competitor in the AI race, is not renting its most powerful TPUs to its rival, The Information said, citing a Google Cloud employee. Both OpenAI and Google did not immediately respond to Reuters requests for comment. OpenAI planned to add Google Cloud service to meet its growing needs for computing capacity, Reuters had exclusively reported earlier this month, marking a surprising collaboration between two prominent competitors in the AI sector. For Google, the deal comes as it is expanding external availability of its in-house TPUs, which were historically reserved for internal use. That helped Google win customers including Big Tech player Apple as well as startups like Anthropic and Safe Superintelligence, two OpenAI competitors launched by former OpenAI leaders. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
27-06-2025
- Business
- Yahoo
Oracle Benefits From AI Cloud Service Adoption: A Sign of More Upside?
Oracle's ORCL collaboration with xAI to deploy its Grok models via the Oracle Cloud Infrastructure ('OCI') is expected to further drive momentum in the company's cloud services and license support revenues in the near term. OCI spans domains like compute, databases and AI services, providing end-to-end solutions for enterprise workloads. Oracle's 23 AI database has helped businesses integrate AI solutions by automating workflows and providing flexibility to tailor models to business-specific needs. Oracle had previously demonstrated its ability to host, train and scale various models through partnerships with Cohere, LLAMA 2 and NVIDIA AI Enterprise. The latest partnership with xAI is expected to significantly increase OCI compute, storage and network usage. Additionally, the seamless deployment of Grok models is likely to encourage long-term contract renewals. Looking forward, total cloud revenues are expected to grow 26-30% for the first quarter of 2026, and by over 40% for fiscal 2026. The company also noted that for fiscal 2026, cloud infrastructure revenues are projected to grow even more than 70%, up from 51% in the prior year. Oracle faces tough competition from players like Alphabet GOOGL and Amazon AMZN. Alphabet's Google Cloud invests heavily in custom AI chips called TPUs and recently introduced its latest version, Ironwood. The company recently launched the 'Cloud Wide Area Network,' making Google's private cloud network globally accessible. The recent inclusion of Gemini 2.5 and Flash into Alphabet's Vertex AI Platform is expected to transform enterprise-AI sophistication. Amazon's cloud services are deployed via AWS. Amazon's AI applications like Alexa+ and its latest AI chip, Trainium 2, are delivering massive improvements in performance and efficiency. Amazon's Bedrock recently integrated Anthropic's Claude 3.7 Sonnet and Meta's Llama 4 model family to build high-quality Generative AI applications. The company recently launched a preview version of Amazon Nova Act, designed to help developers break down complex tasks and perform commands in web browsers. ORCL's shares have appreciated 27.7% in the year-to-date period, outperforming both the Zacks Computer and Technology sector's return of 5.5% and the Zacks Computer-Software industry's appreciation of 14.6%. Oracle's shares have also outperformed Alphabet and Amazon in the year-to-date period. While shares of GOOGL dropped 8.4%, AMZN plunged 1.0%. Image Source: Zacks Investment Research Oracle trades at a three-year EV/EBITDA of 26.53X, substantially above the Zacks Computer-Software industry average of 19.86X. ORCL has a Value Score of D. Image Source: Zacks Investment Research The Zacks Consensus Estimate for ORCL's fiscal 2026 revenues is currently pegged at $66.63 billion, indicating 16.08% year-over-year growth. The consensus mark for 2026 earnings is pegged at $6.71 per share, up 1.05% over the past 30 days. This indicates an 11.28% increase from the figure reported in the year-ago quarter. Oracle Corporation price-consensus-chart | Oracle Corporation Quote ORCL currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Inc. (AMZN) : Free Stock Analysis Report Oracle Corporation (ORCL) : Free Stock Analysis Report Alphabet Inc. (GOOGL) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
Yahoo
16-06-2025
- Business
- Yahoo
Potential Alphabet (GOOGL) and OpenAI Deal Could Shift Dynamics in AI Race
Alphabet Inc. (NASDAQ:GOOGL) is one of the 10 best tech stocks to buy according to billionaires right now. On Tuesday, June 10, Reuters reported that OpenAI is partnering with Google Cloud to meet its growing need for computing power, citing three sources familiar with the matter. As both these companies are seen as competitors in AI space, this collaboration is a bit surprising, especially, since OpenAI's ChatGPT has long been seen as disruptor for Google's search business. However, the agreement was finalized in May and brings Google into OpenAI's expanding network of infrastructure providers as it scales training and deployment of advanced AI models. Pixabay/Public Domain Google Cloud aims to position itself as a flexible and neutral platform for handling high-performance computing workloads, responding to growing industry demand for infrastructure. As per Reuters, a key factor in securing this agreement was the company's decision to open access to its proprietary Tensor Processing Units (TPUs) for external partners. While one of Reuters' sources mentioned that the deal was finalized in May (after months of discussion), none of the concerned companies has agreed to comment on Reuters' queries. Earlier last week, Wing Aviation LLC, a subsidiary of Alphabet, announced its plan to expand 'Wing' drone delivery to an additional 100 Walmart stores across selected markets. The companies have highlighted this as world's largest drone delivery expansion. On the announcement, Greg Cathey, SVP, Walmart U.S. Transformation and Innovation, stated: 'As we look ahead, drone delivery will remain a key part of our commitment to redefining retail. We're pushing the boundaries of convenience to better serve our customers, making shopping faster and easier than ever before.' Alphabet Inc. (NASDAQ:GOOGL) is the parent company of Google and a pioneer in internet-related services and products, including online advertising technologies, search engines, cloud computing, software, and hardware. The company is also a leading investor in data centers and fiber networks, operating a vast global network of data centers that support its cloud services and other digital offerings. While we acknowledge the potential of GOOGL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money. Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
