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 $114.17 as of Jan 28th. AMD’s trailing and forward P/E were 101.04 and 23.04 respectively according to Yahoo Finance.
A close up of a complex looking PCB board with several intergrated semiconductor parts.
DeepSeek’s emergence marks a significant shift in the AI landscape, particularly for companies like AMD. The recent release of DeepSeek-R1, boasting 671 billion parameters at a reported training cost of just $5.58 million, suggests that AI models are becoming exponentially more efficient. While skepticism remains regarding the validity of China’s cost claims, the overarching trend is clear: more parameters per dollar will drive rapid AI adoption, benefiting key players in AI infrastructure. For AMD, this is both a short-term challenge and a long-term opportunity.
The market initially reacted negatively to DeepSeek’s advancements, with AMD experiencing premarket declines. Investors feared that drastically lower training costs could temporarily reduce demand for GPUs. However, this ignores the larger dynamic at play—cheaper AI models don’t shrink demand for compute; they expand it. Lower training costs mean AI can be deployed in more use cases, accelerating the need for both training and inference workloads, which directly benefits AMD.
AMD’s MI300X chip is particularly well-positioned for this shift. With superior memory capacity, it efficiently handles large models like DeepSeek-V3, which has already been integrated. This integration underscores AMD’s growing software capabilities, a crucial factor that has historically limited its AI market penetration. As AMD improves its software ecosystem and leverages its chiplet architecture for cost-effective scalability, it is poised to capture a larger share of the AI market.
Ultimately, DeepSeek’s progress highlights a broader trend: AI is becoming cheaper, faster, and more ubiquitous. AMD’s role in enabling this transformation ensures that, despite short-term market volatility, its long-term growth trajectory remains intact.
Advanced Micro Devices, Inc. (AMD) is on our list of the 30 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.