Santa Clara, California — Advanced Micro Devices (AMD), one of the world’s leading chipmakers, announced on Tuesday its plans to acquire artificial intelligence (AI) software startup Nod.AI, marking a significant step in its quest to rival Nvidia in the AI sector.
Bolstering AMD’s AI Arsenal
AMD’s acquisition of the Santa Clara-based Nod.AI aims to fortify its open-source AI products and systems. While the exact amount remains undisclosed, the move signifies AMD’s commitment to integrating Nod.AI’s state-of-the-art technology into its range of products, from Instinct data-center accelerators and Ryzen processors to Radeon GPUs.
Tapping into Generative AI
The demand for generative AI technologies is surging, and with Nod.AI’s acquisition, AMD is positioning itself to seize this growing market. Nod.AI’s suite of tools promises AMD customers a comprehensive package of developer tools, libraries, and machine learning models.
Vamsi Boppana, AMD’s Senior Vice President of AI, stated, “The acquisition of Nod.ai is expected to significantly enhance our ability to provide AI customers with open software that allows them to deploy highly performant AI models tuned for AMD hardware easily.”
Nod.AI’s Promising Journey
Founded in 2013, Nod.AI has garnered the attention and backing of heavyweight investors such as 8Square Capital, Atlantic Bridge, Pointguard Ventures, and Walden International. Its innovative solutions have been instrumental for both enterprise-level corporations and burgeoning startups. With AMD’s acquisition, Nod.AI’s technologies are set to reach a broader, global clientele.
Interestingly, before establishing Nod.AI, Anush Elangovan, the startup’s CEO, was part of the pioneering team behind Google’s Chromebooks and also held a pivotal role as a lead engineer at Cisco. Harsh Menon, Nod’s co-founder and CTO, previously contributed to Kitty Hawk, the electric aircraft venture supported by Google co-founder Larry Page, which unfortunately ceased operations in 2022.
Nod Labs, the earlier incarnation of the company, started as an AI hardware business focusing on gesture recognition and motion-tracking wearables. The idea was to create innovative devices, such as Bluetooth-enabled rings, that could transform real-life gestures into actions in the virtual gaming world. The startup’s illustrious journey included multi-million dollar investments from renowned venture capital firms like Menlo Ventures and Sequoia Capital. Its team comprises industry experts previously associated with tech giants like Apple, Google, and Samsung.
A Positive Impact on AMD’s Shares
Following the acquisition announcement, AMD’s shares experienced a notable uptick, rising by 1.7% as of 1:40 p.m. Eastern Time on Tuesday. Stakeholders and investors eagerly anticipate the company’s third-quarter earnings report, slated for release on Nov. 7.
AMD’s acquisition of Nod.AI underscores the chipmaker’s ambitious plans in the AI domain. As the industry continues evolving rapidly, such collaborations are crucial in shaping the future of AI-driven technologies and solutions.
3 Insights Into AMD Recognized by Savvy Investors
1. AMD Poised for a Resurgence in AI in 2024
For years, Nvidia has capitalized on its dominance in graphics processing units (GPUs), a critical component in AI model training and development. This dominance allowed Nvidia to secure a significant share of the AI market, highlighting AMD’s challenges in this sector. The semiconductor titan struggled to leverage the surging demand for AI-focused chips this year.
However, investors familiar with the tech landscape understand the importance of a long-term outlook, particularly when considering AI and companies like AMD. There’s growing speculation that AMD might significantly disrupt the AI space in 2024.
2. Stellar Leadership with CEO Lisa Su
Legendary investor Warren Buffett often emphasizes the importance of investing in companies helmed by robust leadership. This principle assures investors that even during challenging periods, adept executives can steer the company toward prosperity.
One of AMD’s most potent assets is its CEO, Lisa Su. When Su assumed the CEO mantle in 2014, AMD was on the precipice of collapse, having laid off nearly a quarter of its workforce. The company’s stock was a mere shadow of its potential, trading around $2. Nevertheless, under Su’s visionary leadership, AMD seized the opportunity presented by Intel’s missteps. The company introduced its Ryzen series of processors in 2017, which quickly became synonymous with exceptional price-to-performance value. This strategic move propelled AMD’s CPU market share from 18% in early 2017 to a commendable 35% by the third quarter of 2023. In contrast, Intel’s share dwindled from 82% to 63%.
3. An Attractive Stock Option Compared to Nvidia
Nvidia’s stock has been on a meteoric rise, skyrocketing by 208% since the beginning of the year. This growth outpaces AMD’s stock appreciation by more than threefold. Nvidia’s rapid ascent has adversely impacted its stock valuation, reflected in its soaring price-to-earnings ratio (P/E) of 109. While AMD’s P/E of 54 isn’t necessarily a steal, it undoubtedly presents better value than Nvidia. Moreover, AMD’s market capitalization of $170 billion, in comparison to Nvidia’s staggering $1 trillion, hints at AMD’s tremendous growth potential. For investors seeking growth, AMD may offer a more compelling proposition.
The AI market’s projected compound annual growth rate is an impressive 37% leading up to 2030. While Nvidia enjoys the early mover advantage, the anticipated market expansion suggests ample opportunities for AMD to reclaim significant market share in the foreseeable future.
AMD’s promising journey in the tech realm, underscored by strategic moves and visionary leadership, makes it a compelling consideration for discerning investors. AMD seems well-equipped to navigate these uncharted waters, with the semiconductor and AI domains poised for substantial growth.
Advanced Micro Devices, often known by its ticker NASDAQ: AMD, is a renowned company in the technology sector. The company is headquartered in Santa Clara, California, and Musaffa has screened its Shariah-compliant status.
AMD’s Business Landscape
Advanced Micro Devices, Inc. engages in the provision of semiconductor businesses. The company is headquartered in Santa Clara, California, and currently employs 25,000 full-time employees. The firm operates through four segments: Data Center, Client, Gaming, and Embedded.
The Data Center segment includes server central processing units (CPUs) and graphics processing units (GPUs), data processing units (DPUs), field programmable gate arrays (FPGAs), and adaptive system-on-a-chip (SoC) products for data centers.
The Client segment includes CPUs, accelerated processing units (APUs) that integrate microprocessors and GPUs (APUs), and chipsets for desktop and notebook personal computers. The Gaming segment includes discrete GPUs, semi-custom SoC products, and development services.
The Embedded segment primarily includes embedded CPUs and GPUs, FPGAs, and adaptive SoC products. The Company’s CPUs for desktop platforms include the AMD Ryzen and AMD Athlon series processors. Its mobile APUs include AMD Ryzen and AMD Athlon mobile processors for the commercial and consumer markets.
Halal Compliance Assessment by Musaffa
When determining if AMD’s stock is Shariah-compliant, there are three main criteria to consider. Firstly, one must evaluate the business activities.
For AMD, non-Sharia-compliant activities make up a mere 0.27% of the company’s revenue, which is comfortably below the permissible 5% threshold.
The second criterion involves examining the company’s interest-bearing debt relative to its market capitalization. In AMD’s case, this debt only accounts for 2.12% of its market cap, which is well within the accepted 30% boundary.
The third and final assessment is the ratio of interest-bearing securities to the company’s market capitalization.
AMD also fits the bill, with its securities making up 5.03% of its market cap, staying below the 30% cap.
Considering all factors, AMD successfully meets all the necessary halal screening criteria and is categorized as HALAL Stock. As a result, Muslim investors can rest assured that investing in AMD aligns with their faith’s investment guidelines.
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Disclaimer: Important information