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AMD’s most recent earnings report showed a concerning slowdown in its data center business, a key growth engine in the burgeoning AI age. The company is banking on its next-generation accelerator to reignite disappointing data center sales in Q2 and set itself apart from Nvidia, the market leader in GPUs. Production of AMD’s MI300X accelerator is likely to pick up toward the end of the year, boosting energy efficiency and cutting latency. Energy is a key consideration for data centers, which will undoubtedly see their electricity consumption expand significantly in years to come.

Related ETF & Stocks: iShares Semiconductor ETF (SOXX), Advanced Micro Devices, Inc. (AMD), NVIDIA Corporation (NVDA), Intel Corporation (INTC)

Despite a broader decline in the share prices of its competitors, chipmaker Advanced Micro Devices (AMD) managed to trade higher last week on a wave of earnings optimism. Second-quarter adjusted earnings were equivalent to $0.58 per share, compared with Wall Street’s consensus estimate of $0.57, according to FactSet. Revenue came in at $5.36 billion for the period, beating analyst expectations of $5.3 billion. One disappointing aspect of the chipmaker’s report was the critical data-center unit, which saw revenue decline -11% from a year earlier in the June quarter. There was a silver lining in the earnings call, however, as AMD CEO Lisa Su noted that AMD’s “AI engagements increased by more than seven times in the quarter as multiple customers initiated or expanded programs supporting future deployments of Instinct accelerators at scale.” An accelerator is a parallel computation machine that improves the efficient processing of burdensome AI workloads by deploying algorithms across multiple processors.

The term “graphics processing unit” (GPU) has become synonymous with AI, as these chips have been identified as the most optimal hardware for training artificial intelligence and deep learning models. GPUs themselves are accelerators, leveraging a large number of cores, which allows for better computation of multiple parallel processes. However, AMD has worked to differentiate its accelerators from the traditional GPU business, as their latest generation of accelerator, the MI300X, is formed by combining multiple GPU chiplets. These are expected to be one of the most critical technologies for data centers in the burgeoning AI age, offering…

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