6. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 108
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a major semiconductor company that designs and manufactures microprocessors, graphics processing units (GPUs), and other computing components, and is known for its competitive products in the gaming and high-performance computing markets.
Advanced Micro Devices, Inc (NASDAQ:AMD) impressed Wall Street with Q2 results, where the data center revenue in the period grew 49% year over year. Overall revenue growth was 8.88% for the quarter, recording a total revenue of $5.84 billion. This was $113.81 million higher than estimates. Ryzen CPU sales increased 49% over the year. Gaming revenue declined 59% due to decreased PlayStation and Xbox sales, but Radeon 6000 GPUs saw a year-over-year sales increase.
The 2023 launch of its Instinct™ MI300 Series accelerators, designed for AI and HPC workloads, is still a major contributor to the company’s growth. This chip competes with Nvidia’s H100 AI chip. The company now plans on releasing new AI chips annually, including the MI325X by the end of 2024, the MI350 in 2025 (a competitor to Nvidia’s Blackwell), and the MI400 in 2026.
Dan Ives of Wedbush believes that the company’s strong results and AI investments suggest a promising future in the AI market. He expects it to benefit significantly from the growing AI spending, which is estimated to reach $1 trillion over the next few years. Investors seem to follow the same opinion, as 108 hedge funds held long positions in this company by June 30. Fisher Asset Management had the largest stake, valued at $3,755,355,818.
Meridian Contrarian Fund stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its fourth quarter 2023 investor letter:
“Advanced Micro Devices, Inc. (NASDAQ:AMD) is a global semiconductor chip maker specializing in central processing units (CPUs), which are considered the core component of most computing devices, and graphics processing units (GPUs), which accelerate operations running on CPUs. We invested in 2018 when it was a mid-cap value stock plagued by many years of underperformance due to lagging technology and lost market hi share versus competitors Intel and Nvidia. Our research identified that changes and investments made by current management under CEO Lisa Su had, over several years, finally resulted in compelling technology that positioned AMD as a stronger competitor to Nvidia and that its latest products were superior to Intel’s. We invested on the the belief that AMD’s valuation at that that time did not reflect the potential for its technology leadership to generate significant market share gains and improved profits. This thesis has been playing out for several years. During the quarter, AMD unveiled more details about its upcoming GPU products for the AI market. The stock reacted positively to expectations that AMD’s GPU servers will be a viable alternative to Nvidia. Although we pared back our exposure to AMD into strength as part of our risk-management practice, we maintained a position in the stock. We believe AMD will continue to gain share in large and growing markets and is reasonably valued relative to the potential for significantly higher earnings.”
