AMD (Advanced Micro Devices) shares faced a decline on September 14, as increasing discussions and prominent warnings from experts about the possibility of slowing rapid development of artificial intelligence (AI) models emerged. Dario Amodei, one of the senior executives at Anthropic, warned in an article titled "We Need to Tread Carefully" that the development of AI models without oversight could outpace human safety controls within 6 to 12 months.
Reactions from the Tech Industry
In response to these concerns, Sam Altman, CEO of OpenAI, committed to employing independent safety evaluators, and Elon Musk, the billionaire tech mogul, also agreed that the industry should slow down to prevent catastrophic mistakes.
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Despite today’s decline, AMD shares are currently trading at more than double their price at the beginning of this year. The statements made by tech leaders, warning that AI capabilities are advancing faster than safety barriers, have caused panic among short-term investors.
Impact on AMD Valuation
If the industry truly heeds these warnings, costs associated with AI may decrease in the future, which could be detrimental to AMD shares. This is because AMD's projected earnings ratio, which is about 80 times, depends on the relentless demand for data center accelerators like the Instinct MI300 series.
However, if large buyers reduce their pace of GPU and AI chip purchases, AMD will face valuation pressure, as any reduction in costs will harm the company's profit margins.
Statements from tech leaders like Amodei, Altman, or Musk do not signify a commercial failure; rather, they call for the establishment of operational barriers and responsible implementation. This maturity does not mean collapse.
This decline in AMD shares today is seen as an attractive buying opportunity for long-term investors, especially considering that the company is in the process of repurchasing billions of dollars in stock. Additionally, data shows that public sentiment towards AMD is on average "88% buy," indicating that technical momentum remains positive in the short term.
Despite significant price increases this year, Wall Street remains optimistic about AMD shares over the next 12 months. The consensus rating for AMD has been "strong buy" and the average price target of nearly $623 indicates potential for about a 25% increase from this point.
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