Goldman Sachs’ Stocks With Highest Consensus Returns: 42 Stocks With The Highest Consensus ROE

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

Consensus ROE: 42%

Number of Hedge Fund Investors in Q2 2024: 108

Advanced Micro Devices, Inc. (NASDAQ:AMD) is a semiconductor designer. The firm sells x86 based CPUs, GPUs, and custom chips. It has one of the most unique positions for any company in the world. In the CPU market, Advanced Micro Devices, Inc. (NASDAQ:AMD) competes with the larger rival Intel, while in the GPU market, it competes with Wall Street’s AI darling NVIDIA. Consequently, it is the only company within the trio with an established position in both markets. Like NVIDIA, Advanced Micro Devices, Inc. (NASDAQ:AMD)’s narrative in 2024 has focused on AI. Its ability to perform well depends on how well it can capture the AI accelerator market from NVIDIA and whether the AI products lead to bottom line profits. Additionally, Advanced Micro Devices, Inc. (NASDAQ:AMD) has also continued to gain CPU market share over Intel due to the latter’s struggles with manufacturing. With NVIDIA’s chips pricey and in short supply, the firm could see tailwinds from capturing sizeable AI accelerator orders from the likes of Tesla and Microsoft.

Advanced Micro Devices, Inc. (NASDAQ:AMD)’s data center division has been its fastest growing segment for several quarters. Here’s what management shared during the Q2 2024 investor call. Here is what they said:

“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.”