1. Advanced Micro Devices Inc. (NASDAQ:AMD)
Number of Hedge Funds: 108
Advanced Micro Devices Inc. (NASDAQ:AMD) is a fabless semiconductor company that designs, develops, and sells computer processors and related technologies for business and consumer markets.
Revenue growth in Q2 2024 was 8.88% compared to the year-ago period, driven by higher-than-anticipated sales of Instinct, Ryzen, and EPYC processors. The data center revenue grew 49% year-over-year. 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 company’s Instinct MI300X AI accelerators are gaining recognition for their impressive price-to-performance ratio, playing a crucial role as Microsoft aims to sell up to 50 million AI-enabled PCs. Launched in 2023, the MI300 Series competes directly with Nvidia’s H100, featuring both AI and HPC chips.
Strong shipments of the MI300 GPUs and increased adoption of Advanced Micro Devices Inc.’s (NASDAQ:AMD) EPYC CPUs have driven growth in the data center segment, with several hyperscalers opting for EPYC processors. The upcoming launch of the MI325X, which promises 2x the memory capacity and 1.3x better performance than its competitors, is expected to further boost sales. Additionally, the recently reviewed Zen-5 Turin processors are anticipated to enhance revenue in the latter half of the year.
This collaboration underscores Advanced Micro Devices Inc.’s (NASDAQ:AMD) strategic importance in Microsoft’s AI initiatives, particularly as the MI300X accelerators are integrated into Azure’s infrastructure, enhancing performance for demanding AI workloads. The company’s strong results and AI investments suggest a promising future in the AI market. It will benefit greatly from the growing AI spending.
Columbia Threadneedle Global Technology Growth Strategy stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q2 2024 investor letter:
“Shares of Advanced Micro Devices, Inc. (NASDAQ:AMD) lagged the market after the company reported earnings results that, while generally strong, left the market wanting more. The company reported AI revenue of ~$600 million and increased its forward-looking outlook for AI revenue growth, but shares took a breather, as results missed elevated expectations after the stock’s strong performance. Despite the stock’s underperformance during the quarter, the company’s AI story remains very much intact. The growth outlook for the company is supported by better cloud demand, enterprise recovery and continued share gains ahead of the company’s new AI product launch.”
As we acknowledge the growth potential of Advanced Micro Devices Inc. (NASDAQ:AMD), our conviction lies in the belief that AI stocks hold great promise for delivering high 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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