BofA’s List Of AI & Semiconductor Stocks That Fund Managers Love & Hate: 16 Stocks On The Manager Radar

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

Number of Hedge Fund Holders In Q2 2024: 108

Section: Losing Popularity

Advanced Micro Devices, Inc. (NASDAQ:AMD) is the second biggest firm in the x86 CPU market which makes it quite important as this industry is effectively a duopoly. It competes with Intel in the CPU market and NVIDIA in the GPU market, making Advanced Micro Devices, Inc. (NASDAQ:AMD) the only firm capable of targeting both of the biggest chip companies in the industry. Additionally, acquisitions such as that of an FPGA company mean that Advanced Micro Devices, Inc. (NASDAQ:AMD) is a rare company capable of competing at all ends of the AI ecosystem, from CPUs to GPUs, and customizable chips. However, it is a distant second to NVIDIA in the GPU market and also depends on non-AI enterprise data center spending for a large portion of its revenue. Yet, Advanced Micro Devices, Inc. (NASDAQ:AMD) could see tailwinds as AI use accelerates in the business world and firms seek low-cost accelerators amidst supply constraints for NVIDIA products.

Advanced Micro Devices, Inc. (NASDAQ:AMD)’s management commented on its data center business during the Q2 2024 earnings call. Here is what they shared:

“Turning to the segments, data center segment revenue increased 115% year-over-year to a record $2.8 billion, driven by the steep ramp of Instinct MI300 GPU shipments and a strong double-digit percentage increase in EPYC CPU sales. Cloud adoption remains strong as hyperscalers deploy fourth-gen EPYC CPUs to power more of their internal workloads and public instances. We are seeing hyperscalers select EPYC processors to power a larger portion of their applications and workloads, displacing incumbent offerings across their infrastructure with AMD solutions that offer clear performance and efficiency advantages.

The number of AMD-powered cloud instances available from the largest providers has increased 34% from a year ago to more than 900. We are seeing strong pull for these instances with both enterprise and cloud-first businesses. As an example, Netflix and Uber both recently selected fourth-gen EPYC Public Cloud instances as one of the key solutions to power their mission critical customer facing workloads. In the enterprise, sales were increased by a strong double-digit percentage sequentially. We closed multiple large wins in the quarter with financial services, technology, health care, retail, manufacturing, and transportation customers, including Adobe, Boeing, Industrial Light & Magic, Optiver, and Siemens. Importantly, more than one-third of our enterprise server wins in the first half of the year were with businesses deploying EPYC in their data centers for the first time, highlighting our success attracting new customers, while also continuing to expand our footprint with existing customers.”