We recently published a list of Top 10 Semiconductor Stocks to Buy Now. In this article, we are going to take a look at where Advanced Micro Devices, Inc. (NASDAQ:AMD) stands against other top semiconductor stocks to buy now.

The global semiconductor industry reported a collective revenue of $626 billion in 2024, an 18.1% increase YoY, as per Gartner. Data centers accounted for the second largest sector for semiconductors, behind Smartphones, with revenues in this sector nearly doubling from $64.8 billion in 2023 to $112 billion in 2024. The International Data Corporation estimated that global demand for semiconductors will grow by 15% in 2025.

The U.S. semiconductor sector is a critical component of the global technology landscape, and its performance has significant implications for the broader economy. In recent years, the industry has experienced both growth and challenges, shaped by several factors. According to analysts, the growth is driven by the increasing reliance on technology in various sectors, including consumer electronics, automotive, healthcare, and artificial intelligence.

The industry has been at the forefront of technological innovation, with companies investing heavily in research and development. This has led to the development of more advanced chips, such as those using smaller process nodes and new materials, enabling greater performance and efficiency. The rapid pace of technological innovation continues to drive demand for more advanced semiconductors. As mentioned earlier, the rise of artificial intelligence (AI) and other emerging technologies is particularly important as these applications require high-performance chips that US companies are well-positioned to provide.

The semiconductor industry is highly competitive, with companies from other countries, particularly in Asia, posing a significant challenge to U.S. companies. This competitive environment has led to increased pressure on pricing and a further need for innovation to maintain a competitive edge. The industry is increasingly affected by geopolitical tensions, particularly between the U.S. and China. The ongoing trade tensions between the US and China have created uncertainty and challenges for the semiconductor industry. These tensions have led to restrictions on trade and investment, which can disrupt supply chains and limit market access for US companies. However, they have also spurred efforts to diversify supply chains and increase domestic production, which could benefit the US semiconductor sector in the long run.

The U.S. government has recognized the strategic importance of the semiconductor industry and has taken steps to support its growth. The CHIPS and Science Act of 2022, which provides significant funding for domestic semiconductor manufacturing and research, is a prime example of this support.

The overall health of the global economy also plays a role in the performance of the semiconductor sector. Economic downturns can lead to decreased demand for electronic devices, which in turn reduces demand for semiconductors. Conversely, periods of economic growth can boost demand for semiconductors and create opportunities for US companies. With the election of President Donald Trump into the Oval Office, analysts are confident that the tech sector will continue to show improved performance.

Our Methodology

For this list, we identified the 10 semiconductor stocks which have the highest upside potential using 12-month consensus price target. Then we merged these stocks with Insider Monkey’s Q4 2024 proprietary hedge fund holdings database and identified the 10 most popular hedge fund semiconductor stocks. The stocks are ranked in ascending order of their hedge fund positions.

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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Advanced Micro Devices, Inc. (NASDAQ:AMD)

No. Of Hedge Fund Holders: 96

Advanced Micro Devices, Inc. (NASDAQ:AMD) offers a wide range of semiconductor products, including CPUs, GPUs, FPGAs, and adaptive SoCs, for data-center, client, gaming, and embedded markets. Its Q4 2024 quarterly earnings call revealed revenue up 24% YoY to $7.7 billion, and EPS improving by 42% YoY to $1.10.

Recent news related to the introduction of an AI out of China, and news of potential US tariffs on China plays a cyclical role on Advanced Micro Devices, Inc. (NASDAQ:AMD)’s stock price, but a strong long-term view. The company’s recent results are a testament to the company’s successful ability to penetrate the AI sector.

Advanced Micro Devices, Inc. (NASDAQ:AMD) EVP and CFO Jean Hu spoke at the Morgan Stanley Global TMT Conference:

“We actually ramped up MI300 really quickly and exceeded $5 billion. Both the MI300 and our ROCm software right now are powering some of the most complicated AI models, right, at Microsoft, at Meta, at scale. So, it’s a lot of progress we made, and the team executed flawlessly, actually, to ramp the production of MI300.

At the same time, we also made tremendous progress in our overall hardware roadmap and the software stack. If you think about the hardware side, not only we introduced the MI325, we also put in this year, MI350. And next year, we’re going to be on track for MI400. On the software side, we made a lot of progress with the ROCm to really support all different applications and the workload. We also acquired ZT Systems to build our system expertise to build rack level and class level designs.

So, overall, the progress made and our engagement with the customers also broadened quite significantly. Not only we add new customers and with existing customers, the engagement has always been about multi-generational. It’s not just about generating MI300 revenue. It’s about the discussions for MI350 and the MI400, how we help our customers to build the clusters to provide a better TCOs.”

Advanced Micro Devices, Inc. (NASDAQ:AMD) has seen a decline in share price over the past year from $170.94 to the current value of $100.31. This is significant for investors seeking to get in when they feel they may have missed an opportunity a year ago, with a consensus of the average twelve month trading share price to be $149.96, representing an upside of 38.9%.

Overall, AMD ranks 5th on our list of top semiconductor stocks to buy now. While we acknowledge the potential for AMD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that delivers higher returns than AMD, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires

Disclosure: None. This article is originally published at Insider Monkey.