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It is expected that over the next few years, big cloud companies and countries alike are poised to spend hundreds of billions of dollars to build new data center clusters around GPUs in order to accelerate the development of cutting-edge AI models. That includes $300 billion this year alone in planned capital expenditures from megacap technology companies.
It will create massive market for AI chips. Advanced Micro Devices, or AMD is expecting the total market for AI chips to exceed $500 billion by 2028, and Nvidia has over 90% of the market currently, according to analyst estimates. As the primary and only rival of Nvidia in big data center GPUs for developing and deploying AI applications, AMD has been sparing no efforts to develop new technology to compete with Nvidia.
AMD on Thursday unveiled new details about its next-generation AI chips, the Instinct MI400 series, that will ship next year. The MI400 chips will be able to be assembled into a full server rack called Helios, AMD said, which will enable thousands of the chips to be tied together in a way that they can be used as one “rack-scale” system.
AMD CEO Lisa Su said “For the first time, we architected every part of the rack as a unified system”. AMD’s rack-scale setup will make the chips look to a user like one system, which is important for most artificial intelligence customers like cloud providers and companies that develop large language models. Those customers want “hyperscale” clusters of AI computers that can span entire data centers and use massive amounts of power.
AMD’s rack-scale technology also enables its latest chips to compete with Nvidia’s Blackwell chips, which already come in configurations with 72 graphics-processing units stitched together.
So far, Nvidia has dominated the market for data center GPUs, partially because it was the first company to develop the kind of software needed for AI developers to take advantage of chips originally designed to display graphics for 3D games. Over the past decade, before the AI boom, AMD focused on competing against Intel in server CPUs. AMD shares are flat so far in 2025, implying that investors doesn’t yet regard it as a major threat to Nvidia’s dominance. As for the outlook of AMD's competition with Nvidia, investors should watch it closely.Complete digital access to quality Glebors financial topic with expert analysis from industry leaders.
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