Demand for graphics processing unit GPUs (i.e., those artificial intelligence chips that drive programs like ChatGPT) has been growing for months, resulting in significant gains for companies that make GPUs。

AMD is up almost 130% in 2023 as investors bet the company's upcoming shipments of AI-oriented GPUs this year can take market share from Nvidia。But high expectations for AI chip growth have led analyst Gus Richard at Northland Capital Markets to admit he's unsure where AMD's stock will go next。

Richard wrote in Monday's report: "We downgraded AMD to [really can't give a valuation].。He said the expression was actually equivalent to holding a rating.。

Richard's view is based on his belief that investor expectations for the growth of AI chips have evolved into "irrational fanaticism."。He forecast total AI chip revenues of $125 billion in 2027 and said the range of expectations was so wide that some analysts estimated $100 billion while others estimated $400 billion.。

Richard writes: "AI is big, really big, but investors don't think it's that big.。"

Overall demand signals get distorted for several reasons, says Richard。First, market leader Nvidia is effectively the "only source" of AI chips that have been in short supply.。This causes customers to "double order," or buy more than they need in advance。He also mentioned the recent move by the United States to ban the export of certain chips to China, which could affect its growth.。

In Richard's calculations, if AMD sold $16 billion of AI chips in 2027 - doubling annually from $2 billion in 2024 - the company would have about 13 percent market share and would continue to ramp up R & D spending to keep up with Nvidia.。He foresees AMD's total revenue of $45 billion in 2027, and says that figure has been factored into the stock price.。

AMD's shares were down about 3 percent as of Monday afternoon.5% to 168.17美元。Nvidia shares rise less than 1%。