1. Advanced Micro Devices Inc. (NASDAQ:AMD)
Number of Hedge Fund Investors: 108
Jim Cramer discussed his observations from Dreamforce, noting that AI isn’t a magic solution for major problems like curing cancer or creating new products. Instead, it’s primarily beneficial for hardware manufacturers like Advanced Micro Devices Inc. (NASDAQ:AMD).
“At Dreamforce, AI is not just a strategy; it doesn’t cure cancer, create products to sell, or even generate numbers for anyone except the companies that manufacture the underlying hardware, that includes AMD. For everyone else, including the hyperscalers, AI is just a necessary expense to keep up with the Joneses. Kind of pathetic, isn’t it? But I found out otherwise today.”
Advanced Micro Devices, Inc. (NASDAQ:AMD) is based on its strong position in fast-growing areas like data centers and artificial intelligence. As the need for high-performance computing rises, Advanced Micro Devices, Inc. (NASDAQ:AMD)’s EPYC processors and Radeon graphics cards are seeing increased sales, outperforming competitors such as Intel Corporation (NASDAQ:INTC) and NVIDIA Corporation (NASDAQ:NVDA). The successful launch of the Ryzen 7000 series further strengthens Advanced Micro Devices, Inc. (NASDAQ:AMD)’s market presence.
Partnerships with major cloud providers like Microsoft Corporation (NASDAQ:MSFT) and Alphabet Inc. (NASDAQ:GOOG), boost its use in enterprise solutions. Additionally, Advanced Micro Devices, Inc. (NASDAQ:AMD) reported a 30% year-over-year revenue increase, reaching $5.3 billion in Q2 2024, highlighting its financial strength. Its leading role in the gaming console market ensures a steady income, while ongoing investments in AI capabilities promise future growth.
Baron Technology Fund stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q2 2024 investor letter:
“Advanced Micro Devices, Inc. (NASDAQ:AMD) is a global fabless semiconductor company focusing on high performance computing technology, software, and products including CPUs,9 GPUs, FPGAs,10 and others. Shares of AMD remain volatile, and after a strong run earlier in the year, the stock fell during the quarter as investors continue to wrestle with AMD’s competitive positioning in the AI compute market relative to NVIDIA, who continues to strengthen its full-system solution offerings at a rapid pace.
AMD also updated its MI300 GPU chip revenue expectations for the full year to “greater than $4 billion” vs. prior $3.5 billion, which disappointed the market a bit relative to high expectations. Over the long-term, we believe AMD, with its unique chiplet-based architecture and open-source software ecosystem, will play a meaningful role in the rapidly growing AI compute market, where customers don’t want to be locked into a single vendor and AMD offers a compelling total-cost-of-ownership proposition, especially in inferencing workloads.
Simultaneously, we believe AMD will continue to take share from Intel within traditional data center CPUs, which, while now a slower growth market, is likely to see a near-term refresh as data centers look for ways to improve energy efficiency and optimize existing footprints.”
While we acknowledge the potential of Advanced Micro Devices, Inc. (NASDAQ: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 the ones on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
