12 Cheap AI Stocks to Buy in 2025

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4. Advanced Micro Devices, Inc. (NASDAQ:AMD)

Analyst Upside (as of January 27): 59%

No. of Hedge Fund Holders: 107

Advanced Micro Devices, Inc. (NASDAQ:AMD), NVIDIA’s counterpart, specializes in manufacturing semiconductors, providing processors, and graphics solutions for gaming, data centers, and embedded systems, with a core focus on high-performance computing using AI use cases.

Where NVDA led the AI boom in 2024, Advanced Micro Devices, Inc. (NASDAQ:AMD) shares plunged over 35% in the last year. Earlier in December 2024, someone asked Jim Cramer if he was worried about AMD and the stock’s underperformance. Here is what Cramer said:

“This is very difficult, and you’re absolutely right to bring it up, and I’m glad you did. Here’s the problem. It is absolutely true—it is absolutely true that they’re not doing as well as Nvidia. It is true that they do not have the big Amazon orders that I’ve been looking at. But can we just remember that Lisa Su has built an amazing company, taking a lot of shares from Intel? She got the number two when it comes to the data center, when it comes to AI, and come on, she just did the great deal where she got all these engineers to come in.

Advanced Micro Devices, Inc. (NASDAQ:AMD) has transformed its business from a struggling company to a semiconductor leader, with its stock jumping from $3 to $115 over a decade, as of January 27. In 2024, AMD introduced the Instinct MI325X AI accelerators and next-generation networking solutions, focusing on strengthening its position in the AI data center market. The company’s majority of revenue comes from data center sales. In 2024, the company acquired ZT Systems for around $5 billion. The ZT Systems purchase will further help Advanced Micro Devices in improving its market share in AI data centers.

During the third quarter of 2024, Advanced Micro Devices, Inc. (NASDAQ:AMD) posted a revenue of $6.82 billion, up by 18% year-over-year and beating estimates by $104.33 million. The data center revenue accounted for $3.5 billion, up 122% year-over-year, driven by significant growth in EPYC CPU and Instinct GPU sales.

On January 21, Citi maintained a Buy rating on AMD shares and lowered the price target from $200 to $175. The firm expects a drop in semiconductor sales due to weaker demand in PC, automotive, and industrial markets. However, analysts project AMD’s data center business to expand, driven by AI sales.

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