We recently published a list of 10 AI Stocks on Wall Street’s Radar After DeepSeek Breakthrough. In this article, we are going to take a look at where Advanced Micro Devices (NASDAQ:AMD) stands against other AI stocks on Wall Street’s radar after DeepSeek breakthrough.
AI investors are desperately trying to find clues on the real impact of DeepSeek on chip demand in the future and gauge how the breakthrough in China would impact US companies. Tae Kim, senior technology writer at Barron’s, said in a latest program on CNBC that DeepSeek has been able to significantly reduce the AI costs but that would increase more use cases of the technology:
“Over time, computing history has shown when you get more computing power and put that into the hands of developers, they figure out new applications, new workloads to use it. I mean, there’s that saying, “Oh, you only need 640k of memory,” and then obviously that proved false. So over time, like researchers, I mean, we have healthcare, drug discovery, trillions of proteins that need to be simulated, robotics. There are these three mega trends that are happening this year right now: multimodal, where you analyze audio and video, there’s AI agents, all these things are happening that are going to require more computing power.”
The question, however, everyone would be focusing on in the coming days is what if a hardware breakthrough happens in China and the country comes up with its own AI chips performing at par with its US counterparts.
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For this article, we picked 10 AI stocks currently trending on the latest news. 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: 107
Melius Research recently downgraded Advanced Micro Devices (NASDAQ:AMD) to Hold from Buy based on its bearish outlook on the company’s x86 servers and PCs. The firm believes Nvidia will impact Advanced Micro Devices Inc (NASDAQ:AMD) market share in both x86 servers and PCs with its Arm-based CPUs, which are optimized for accelerated PCs.
“We think Nvidia is going to increasingly ‘come for them’ in both markets with their Arm-based CPUs that are optimized for ‘accelerated PCs,’” said Melius analysts led by Ben Reitzes in a Tuesday note to investors. “Also, we are increasingly concerned that custom CPUs and Nvidia CPUs will cannibalize even more of the x86 server market long-term even though Advanced Micro Devices Inc (NASDAQ:AMD) current chip, Turin, is doing well.”
Melius also lowered its price target for Advanced Micro Devices Inc (NASDAQ:AMD) to $129 from $160.
Reitzes added, “Perhaps now with the rise of DeepSeek and cheaper models that can run on PCs—the desire for real AI-optimized PCs will accelerate [not the Microsoft (MSFT) AI PC]—begging for more integrated Nvidia-based solutions that can run AI apps better.”
White Falcon Capital Management stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q4 2024 investor letter:
“During the year, we sold half of our stakes in Advanced Micro Devices, Inc. (NASDAQ:AMD) and Nu Holdings as they reached their intrinsic values. However, the decline in these stocks toward the end of the year provided us with an opportunity to add to our positions. In AMD’s case, the market has been disappointed by the company’s potential shortfall in AI chip revenues, which were previously forecasted to reach $10 billion in 2025. However, the factors required to justify the investment when the stock is priced at $220 per share are vastly different from those needed when the stock is at $120 per share. Yes, AMD’s AI chips and associated software are not competitive with Nvidia but this is now known and in the valuation. We believe this hyperfocus on AI ignores AMD’s other businesses where they continue to take advantage of Intel’s missteps. Importantly, AMD retains the potential to capture a small share of the AI chip market, which, given the market’s massive size, could be highly impactful for the company.”
Overall, AMD ranks 4th on our list of AI stocks on Wall Street’s radar after DeepSeek breakthrough. While we acknowledge the potential of AMD, our conviction lies in the belief that under the radar 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 is originally published at Insider Monkey.