We recently published a list of 10 Best Extremely Profitable 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 best extremely profitable stocks to buy now.
Can the S&P Hit 7,000 By the End of 2025?
Ed Yardeni, president of Yardeni Research, appeared on CNBC on November 27 to share insights on the market’s anticipated performance in 2025. He emphasized the significance of staying invested despite existing risks and high valuations, noting that the economy has shown resilience and interest rates have stabilized.
Yardeni pointed out that many new investors are gravitating toward small and mid-cap sectors, which he considers a sound strategy due to their relative affordability. He also highlighted the S&P 493 stocks as being undervalued compared to the Magnificent Seven, asserting that the overall market outlook remains positive despite potential tariff fluctuations. He believes that tax cuts and deregulation could enhance corporate earnings.
Yardeni attributed much of the market’s potential growth to an ongoing productivity boom, which he described as still being in its early stages. He noted that productivity levels have improved significantly from nearly zero in 2015 to around 2% currently, with historical precedents suggesting that such booms can reach as high as 4%. This improvement is driven by advancements in technology, which he argues will continue to drive productivity gains.
READ ALSO: 10 Most Promising New Technology Stocks According to Hedge Funds and 10 Best Tech Stocks to Invest In On the Dip.
When discussing whether this boom is primarily driven by artificial intelligence (AI), Yardeni acknowledged AI’s importance but also pointed to other technological advancements in cloud computing, robotics, and automation as contributing factors.
He identified a shortage of skilled labor as a key driver of productivity growth and explained that technology has enhanced efficiency, allowing wages to rise faster than prices, thus stimulating economic activity. In his concluding remarks, Yardeni projected that the S&P 500 could reach 7,000 by the end of 2025 and potentially hit 10,000 by the end of the decade, reflecting his bullish outlook on market performance fueled by these economic dynamics.
A close up of a complex looking PCB board with several intergrated semiconductor parts.
Our Methodology
To compile the list of the 10 best extremely profitable stocks to buy now, we used the Finviz stock screener, Yahoo Finance, and Seeking Alpha. Using the screener, we shortlisted stocks that have grown their revenue and net income by at least 25% over the past 5 years. After sorting our initial list by market cap, we cross-checked the revenue and net income growth rates from Seeking Alpha. We also considered the trailing twelve-month net income and selected stocks that had a trailing twelve-month net income of more than $500 million. Lastly, we ranked the stocks in ascending order based on the number of hedge fund holders in Q3 2024, sourced from Insider Monkey’s database.
Why do we care about what hedge funds do? 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).
Advanced Micro Devices, Inc. (NASDAQ:AMD)
5 Year Revenue Growth: 32.17%
5 Year Net Income Growth: 54.27%
TTM Net Income: $1.83 Billion
Number of Hedge Fund Holders: 107
Advanced Micro Devices, Inc. (NASDAQ:AMD) is an international company that specializes in semiconductors, which are essential components used in electronic devices. In simple terms, AMD designs and creates the chips that power computers, gaming consoles, and data centers. The company operates through four main segments including Data Centers, Client, Gaming, and Embedded segment.
The company is making significant strides in introducing new products that are powering data centers and the AI revolution. On November 12, the company announced the Versal Premium Series Gen 2, a new line of products designed to enhance system performance for demanding data-intensive tasks. With the increasing demand for AI capabilities, the new product line is designed to accelerate AI model training and inference, making it a valuable asset for businesses focusing on AI development.
During its third-quarter results for fiscal 2024, Advanced Micro Devices, Inc. (NASDAQ:AMD) reported net revenue of $6.8 billion, indicating an 18% increase year-over-year. The gross margin of the company stood at 50%, with $724 million in operating income. The company’s CEO, Dr. Lisa Su, noted that the company achieved record revenue primarily due to increased sales of its EPYC CPU and Instinct data center products and strong demand for Ryzen PC processors.
For the fourth quarter of 2024, Advanced Micro Devices, Inc. (NASDAQ:AMD) anticipates revenue to be around $7.5 billion, with a possible variation of $300 million. This forecast indicates a 22% increase compared to the same quarter last year and a 10% increase from the previous quarter.
Columbia Threadneedle Global Technology Growth Strategy stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q2 2024 investor letter:
“Shares of Advanced Micro Devices, Inc. (NASDAQ:AMD) lagged the market after the company reported earnings results that, while generally strong, left the market wanting more. The company reported AI revenue of ~$600 million and increased its forward-looking outlook for AI revenue growth, but shares took a breather, as results missed elevated expectations after the stock’s strong performance. Despite the stock’s underperformance during the quarter, the company’s AI story remains very much intact. The growth outlook for the company is supported by better cloud demand, enterprise recovery and continued share gains ahead of the company’s new AI product launch.”
Overall, AMD ranks 2nd on our list of best extremely profitable stocks to buy now. While we acknowledge the potential of AMD to grow, our conviction lies in the belief that 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 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.
