We recently published a list of 10 AI News and Analyst Ratings You Should Not Miss. Since Advanced Micro Devices, Inc. (NASDAQ:AMD) ranks 4th on the list, it deserves a deeper look.
While everyone is talking about rate cuts, some analysts are questioning whether it was necessary even to start cutting rates at this time. Latest data released on Tuesday showed retail sales in the US rose while Wall Street analysts were expecting to see a decline. Oksana Aronov, JPMorgan Asset Management head of market strategy for alternative fixed income, said while talking to CNBC that rate cuts are not even warranted as she thinks there are no signs of broader weakening except for the labor market.
Aronov said cutting rates would “loosen” the financial conditions further. The analyst said that about 14 months ago, everyone was looking at the CPI that was clocking in at 3% and expected the metric to fall to 2%. But even after all these months, CPI year over year is at 2.9%. She said that the Fed should move carefully and the 2% inflation target would be “elusive” because fiscal spending will continue to rise.
AI investors are however looking beyond this debate and already positioning to pile into more growth stocks amid the beginning of the rate-cut cycle.
For this article, we picked 10 buzzing AI stocks and discussed the latest news around them.
With each stock we have mentioned the number of hedge fund investors. Why are we interested in 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 Investors: 108
New Street Research has said in a latest report that the AI PC demand companies like Advanced Micro Devices, Inc. (NASDAQ:AMD) are counting on may not be that strong after all.
The report said that in the second quarter of 2024, PC shipments rose just 3% year-on-year. For the full year, PC shipments are now expected to remain flat compared to last year. Even with an upcoming PC refresh cycle, the International Data Corporation only forecasts a 5% increase in 2025.
“In notebooks, Advanced Micro Devices, Inc. (NASDAQ:AMD) gained 1pt of unit share with the continued ramp of Ryzen 7000-8000 (4nm), while Alder Lake (Intel 7) and older SKUs declined, as inventories built up during 1Q flushed, offsetting the Meteor Lake (Intel 4) ramp,” said New Street analysts, led by Pierre Ferragu. “Intel ASPs were down 2% QoQ vs. up 13% at AMD, resulting in Advanced Micro Devices, Inc. (NASDAQ:AMD) revenue share up 3pts.”
“Inventory movements could explain some of it, but the reality is that Intel is still losing share despite being back at the leading edge in notebooks.”
The report said most of the demand is driven by enterprise customers and consumer-related demand is slow.
New Street Research notes that inventories for PC CPUs are again high, and further increases could result in weaker demand heading into 2025.
The firm also sees little evidence of AI PCs driving demand higher. “The supply chain wants to believe in an AI-driven refresh cycle, but we see no evidence of it,” Ferragu said. “Gen AI will revolutionize the user experience for PCs and personal devices more broadly, but the revolution won’t be hardware-driven and won’t create a near-term product cycle, in our view. Killer use cases are still quite remote and will gain adoption through software.”
Despite this, New Street believes Advanced Micro Devices, Inc. (NASDAQ:AMD) is well-positioned to benefit from AI growth in 2025, particularly due to its MI300 GPU series.
Baron Technology Fund stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q2 2024 investor letter:
“Advanced Micro Devices, Inc. (NASDAQ:AMD) is a global fabless semiconductor company focusing on high performance computing technology, software, and products including CPUs,9 GPUs, FPGAs,10 and others. Shares of AMD remain volatile, and after a strong run earlier in the year, the stock fell during the quarter as investors continue to wrestle with AMD’s competitive positioning in the AI compute market relative to NVIDIA, who continues to strengthen its full-system solution offerings at a rapid pace. AMD also updated its MI300 GPU chip revenue expectations for the full year to “greater than $4 billion” vs. prior $3.5 billion, which disappointed the market a bit relative to high expectations. Over the long-term, we believe AMD, with its unique chiplet-based architecture and open-source software ecosystem, will play a meaningful role in the rapidly growing AI compute market, where customers don’t want to be locked into a single vendor and AMD offers a compelling total-cost-of-ownership proposition, especially in inferencing workloads. Simultaneously, we believe AMD will continue to take share from Intel within traditional data center CPUs, which, while now a slower growth market, is likely to see a near-term refresh as data centers look for ways to improve energy efficiency and optimize existing footprints.”
Overall, Advanced Micro Devices, Inc. (NASDAQ:AMD) ranks 4th on Insider Monkey’s list titled 10 AI News and Analyst Ratings You Should Not Miss. While we acknowledge the potential of Advanced Micro Devices, Inc. (NASDAQ:AMD), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AMD stock that is more promising than AI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These Stocks.
Disclosure: None. This article is originally published at Insider Monkey.
