We came across a bullish thesis on Advanced Micro Devices, Inc. (AMD) on Substack by Antonio Linares. In this article, we will summarize the bulls’ thesis on AMD. Advanced Micro Devices, Inc. (AMD)’s share was trading at $141.13 as of Nov 25th. AMD’s trailing and forward P/E were 124.89 and 28.33 respectively according to Yahoo Finance.
AMD is steadily cementing itself as a formidable rival to Intel and Nvidia, leveraging its chiplet platform to deliver superior products and capture market share. While Intel’s dominance in CPU and PC markets persists, AMD’s strategy of innovation and collaboration has positioned it to benefit from both expanding demand and incremental market share gains. This approach, previously successful in CPUs, is now being replicated in AI GPUs, a segment where AMD is seeing rapid adoption despite market impatience and skepticism. Notably, the stock has struggled, down 27% from its peak, reflecting a disconnect between AMD’s achievements and market perception.
AMD’s Q3 2024 results highlighted its strong progress. AI GPU sales guidance for FY2024 was revised up to $5 billion, signaling exponential growth in the Datacenter segment, which now accounts for 52% of revenue. Companies like Meta and Microsoft are adopting AMD’s MI300 accelerators for critical workloads, further validating its technology. Meta has deployed over 1.5 million EPYC CPUs and is expanding MI300 deployments, with future models like Llama 4 poised to rely on AMD’s hardware. Similarly, Microsoft is integrating MI300 across multiple applications, underscoring AMD’s ability to meet the demands of leading tech giants.
AMD’s strategic cadence continues to deliver innovation, exemplified by the launch of the MI325X, which offers a 20% inference capacity increase over its predecessor. With MI350 and MI400 on the horizon, AMD is broadening its workload capabilities, moving from inference to training workloads. The company’s focus on building trust with customers has driven strong operating margins, with the Datacenter segment achieving a 29% margin in Q3, up 1,000 basis points from a year ago.
Despite cyclicality in Gaming and Embedded segments, AMD remains resilient. The Client segment is thriving, with 29% YoY revenue growth driven by demand for Zen 5 processors and Ryzen AI Pro platforms. AMD is poised to capitalize on a PC refresh cycle as consumers shift to AI-enabled devices. In Embedded, AMD’s adaptive SOCs are powering SpaceX satellites, showcasing its edge in AI workloads at the frontier of technology.
AMD’s long-term vision remains compelling. With its growing portfolio of AI-enabled products, deepening customer relationships, and robust innovation pipeline, AMD is positioning itself as an end-to-end AI leader. Over the next five years, AMD’s transformation into a tech powerhouse seems inevitable, with its financial performance set to reflect these strides.
Advanced Micro Devices, Inc. (AMD) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 107 hedge fund portfolios held AMD at the end of the third quarter which was 108 in the previous quarter. While we acknowledge the risk and potential of AMD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AMD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
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