We recently compiled a list of the 13 Best Big Tech Stocks To Buy Now. In this article, we are going to take a look at where Advanced Micro Devices, Inc. (NASDAQ:AMD) stands against the other big tech stocks.
The State of Big Tech Right Now
Big tech has long been an immensely popular area to invest in when it comes to US stocks, and for good reason. Tech stocks, particularly those investing in AI and offering AI products, have been generating immense returns in 2024, with the second week of September bearing witness to their immense potential. This week, the S&P 500 and the Nasdaq Composite posted their best returns for the entire year, and many tech stocks were part of the faction that made this possible. As a result, there’s a huge rise in the popularity of AI and tech stocks. This is in stark contrast to market opinions on AI stocks, particularly during the first week of September, when many were very concerned that we are in an AI hypecycle that is bound to wind down soon.
Altimeter Capital’s CEO, Brad Gerstner, recently joined CNBC’s “Closing Bell” to discuss trends shaping big tech right now. He noted that the pace of AI at present is faster than any other tech development seen before. He also added that many investors are starting to lean back into big tech ahead of the election. This development may be coming about because of the historical trend that suggests that stocks perform better in the months directly following a US election – in which case, it makes sense for investors to be piling into big tech and AI right now since that’s a sure shot way to profit in the next few months.
How Is Big Tech Impacting Other Sectors?
A recent notable trend that people have begun to see because of the rise of big tech companies and the growing use of AI is a greater demand for power. Many major tech companies are beginning to require more energy, with the AWS-owner going as far as buying a nuclear-powered data center for $650 million recently.
The primary driving force for this rising demand is the need to develop AI. Many energy-conscious investors may see this new trend as a red flag for big tech. However, Jensen Huang has noted that while AI takes a ton of energy to train, once developed and trained, it will also help save energy. He particularly noted that AI is going to become so advanced through this development that it will eventually end up offering solutions that can change the way we use energy, making our operations endlessly more energy efficient.
With this in mind, big tech seems to be quite an interesting space to follow right now, especially in the days leading up to the US Presidential Elections. As such, we’ve compiled a list of the best big tech stocks to buy right now.
Our Methodology
For our list below, we selected big-tech stocks with the highest numbers of hedge funds holding stakes in them during the second quarter and then ranked them based on this metric in ascending order.
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 Holders: 108
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a semiconductor company that offers x86 microprocessors and GPUs. It is based in Santa Clara, California.
Advanced Micro Devices, Inc. (NASDAQ:AMD) is among the top semiconductor picks because it has been working to establish itself as a reasonable alternative to the pricy Nvidia. With the release of its AI GPU, the MI300, in 2023, Advanced Micro Devices, Inc. (NASDAQ:AMD) did manage to gain this reputation. The company has also been primarily benefiting from its AI business, which many investors take to mean that it has immense potential to keep growing.
However, those following Advanced Micro Devices, Inc. (NASDAQ:AMD) would be wise to keep in mind some of the challenges the company is facing. In the second quarter, its gaming and embedded segments struggled a bit since the gaming segment is cyclical and sees downturns between gaming console generations. The embedded segment has been working to high inventory levels, which have led to sales falling.
Because of these difficulties, Advanced Micro Devices, Inc. (NASDAQ:AMD) saw its second-quarter year-over-year revenue growth come in at only 9% – a small figure compared to market leader Nvidia with its triple-digit revenue growth. Despite this, Advanced Micro Devices, Inc.’s (NASDAQ:AMD) position as a robust runner-up in the AI chips space is enough to attract many investors who believe in the company’s potential to expand by taking market share from Nvidia.
In the second quarter, 108 hedge funds were long Advanced Micro Devices, Inc. (NASDAQ:AMD), with a total stake value of $10.3 billion. Fisher Asset Management was the largest shareholder, holding 23,151,197 shares.
Fred Alger Management mentioned Advanced Micro Devices, Inc. (NASDAQ:AMD) in its second-quarter 2024 investor letter:
“Advanced Micro Devices, Inc. (NASDAQ:AMD) is a major global supplier of PC microprocessors and graphics processors to computing original equipment manufacturers (OEMs). The company’s product range spans desktops, notebooks, servers, graphics, and embedded/semi-custom chips. AMD operates in a large addressable market, covering areas such as PCs, servers, high-end gaming, and deep learning. Additionally, AMD has introduced competitive AI technologies, including powerful accelerators poised to capture a share in a market worth several hundred billion dollars. During the quarter, the company reported fiscal first-quarter operating results that met analyst estimates, with strengths in data center GPUs and server CPUs offsetting weaknesses in their gaming and embedded businesses. Moreover, management raised their fiscal second-quarter revenue guidance, albeit slightly below consensus estimates, where they expected double digit growth in data center revenues, while projecting a decline in their gaming segment, driven by weaknesses in both desktop GPUs and Semi-Custom Systems-on-a-Chip (SoC). While weaker-than-expected near-term results weighed on shares during the quarter, we believe the company is positioning itself to potentially benefit from long-term growth in AI infrastructure spending. Specifically, the company continues to gain server CPU market share, which could potentially accelerate as traditional compute deployments begin to recover.”
Overall AMD ranks 11th on our list of the best big tech stocks to buy. While we acknowledge the potential of AMD as an investment, we believe that AI stocks hold promise for delivering high 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.