We recently compiled a list of the 10 Best Revenue Growth Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Advanced Micro Devices, Inc. (NASDAQ:AMD) stands against the other revenue growth stocks.
Outlook for the Year 2025: A Positive Year for Equities?
Citigroup has forecasted 2025 to be a positive and strong year for global stocks. Citi expects a rally in global equities to extend into the year 2025 and estimates a 10% EPS growth for global equities which is slightly below analysts’ consensus of 13%.
The stance was that declining interest rates and easing inflation could help boost corporate earnings. The major world stock benchmark, MSCI All Country World Index Local, is expected to reach 1,140 points by the end of this year which signals a 10% increase from its previous close of 1,035.46. Citi added that the United States and emerging market regions could witness the most robust earnings per share growth of about 15%.
Citi remains ‘overweight’ on U.S. equities but believes that the new Trump administration brings a lot of uncertainty with potential tariffs, tax cuts, and deregulation resulting in a ‘complicated mix of favorable and adverse economic effects’. In 2024, the S&P 500 index rallied 24%, driven by the expected Fed rate cuts, optimism relating to Artificial Intelligence, and the potential deregulation under the new US President-elect. Regarding the effect of these drivers on 2025, Citigroup analysts stated:
“While AI is no longer expected to provide as much EPS growth advantage vs. the rest of the index, any continuation of USD strength and policy uncertainty on tariffs could extend its outperformance”
Our Methodology
In order to compile a list of the 10 best revenue growth stocks to buy according to hedge funds, we first used a stock screener to screen stocks that have more than $2 billion market cap and at least 25% revenue growth over the past 5 years. Moving on, we shortlisted the top 10 stocks from our list which had the highest revenue growth and were the most popular among hedge funds. The 10 best revenue growth stocks to buy according to hedge funds have been arranged in ascending order of their hedge fund sentiment, as of Q3.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close up of a complex looking PCB board with several intergrated semiconductor parts.
Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 107
5-Year Revenue Growth: 32.17%
Advanced Micro Devices, Inc. (NASDAQ:AMD) serves as the high-performance and adaptive computing leader that came into being as a Silicon Valley startup in 1969. The firm operates through multiple segments including Data Center, Client, Gaming, and Embedded. AMD’s mission revolves around building products that accelerate next-generation computing experiences.
Advanced Micro Devices, Inc. (NASDAQ:AMD) has been a major player in the semiconductor landscape. However, it has underperformed peers in the chips sector and has declined by 18% in the past year. Although its growth opportunities as a top AI chip maker are defended, it is major AI stocks such as Credo, Nvidia, and Broadcom have more than doubled in value while stocks with less exposure to AI and more exposure to traditional PCs and servers have suffered. Another concerning aspect is that AMD’s Gaming and Embedded segments remain in a slump with their revenues declining 69% and 25% year over year, respectively, in the most recent quarter although the company is witnessing significant growth in its Data Center and Client segments.
While Bank of America analyst Vivek Arya believes that AMD’s pipeline lacks Nvidia’s by more than a year deeming the company a distant second to NVDA in the race for AI-powering chips and processors. With rising competitive pressures set to weigh down AMD more heading into 2025, Goldman Sachs analyst Toshiya Hari downgraded the stock to ‘neutral’ from ‘buy’ and lowered the price target from $175 to $129, while noting:
“Although we remain constructive on AMD’s ability to take share from Intel in x86-based compute across PCs and traditional servers, we are increasingly concerned [over] the rise of Arm-based custom CPUs and heightened competition in accelerated computing”
Overall AMD ranks 2nd on our list of the best revenue growth stocks to buy according to hedge funds. While we acknowledge the potential of AMD as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued 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 is originally published at Insider Monkey.