On Tuesday, Advanced Micro Devices, Inc (NASDAQ:AMD) looked to tap the artificial intelligence frenzy, courtesy of its planned launch of AI chips exploiting Nvidia Corp's (NASDAQ:NVDA) supply crisis.

CEO Lisa Su shared plans to ramp up production of its flagship MI300 AI chips in the fourth quarter, which though in short supply, are ready to compete against Nvidia's advanced H100 chips, Reuters reports.

Also Read: AMD Q2 Beats Estimates As Server, PC Chip Demand Improves; Chipmaker Signals Strong Engagement Ahead Of AI Chip Launch

Su acknowledged compelling customer interest in the MI300 series chips and deals with "top-tier cloud providers, large enterprises, and numerous leading AI companies" during the third quarter.

AMD is also weighing a strategy similar to Nvidia with its MI300 and older MI250 chips to comply with U.S. Commerce Department restrictions on advanced AI semiconductor sales to China.

AMD expects 2023 sales in its data center business, including MI300 chips, to exceed $6.04 billion in 2022.

Jenny Hardy, portfolio manager at GP Bullhound, which owns Nvidia and AMD stock, said Nvidia still faces supply constraints, leaving an opening for AMD's chip.

AMD has enough components for MI300 chips for an "aggressive" launch in the fourth quarter and ample supply for 2024, Su said.

Su said its older MI250 chip remains an excellent option for less complicated AI tasks.

Cloud players like Microsoft Corp (NASDAQ: MSFT) and Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) Google spending on data centers in the second half of the year will likely lead to a spending shift toward AI chips and infrastructure as per analysts.

AMD expects its third-quarter Data Center and Client segment revenues to grow by a double-digit percentage sequentially, driven by increasing demand for its EPYC and Ryzen processors, partially offset by Gaming and Embedded segment declines.

Price Action: AMD shares traded higher by 1.80% at $119.64 premarket on the last check Wednesday.

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