2. Advanced Micro Devices, Inc. (NASDAQ:AMD)
5-Year Sales Growth: 30.81%
Number of Hedge Fund Holders: 96
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a semiconductor company that focuses on performance computing, graphics, and visualization technologies. The company creates computing products and solutions for a variety of customer markets. It operates through four main business segments, including Data Center, Client, Gaming, and Embedded.
On May 8, DBS analyst Amanda Tan maintained a Hold rating on the stock, highlighting growth prospects and certain risks for the company. The analyst noted that Advanced Micro Devices, Inc. (NASDAQ:AMD) demonstrated strong growth in the data center segment, driven by rising demand for AI technologies, including the new AI accelerators. An instance of increasing demand for the company’s products can be witnessed in this March 31 press release. Advanced Micro Devices, Inc. (NASDAQ:AMD) announced that Oracle Cloud Infrastructure launched new Compute E6 Standard shapes powered by AMD’s 5th Gen EPYC processors. Management noted that the 5th Gen AMD EPYC processors offer enhancements such as higher thread density, improved memory bandwidth, and more PCIe Gen5 lanes for input and output.
However, Tan remains cautious due to the tariff situation, which can reduce GPU revenue for the company. Moreover, the analyst also believes that the heavy dependence on the PC market makes it vulnerable to economic downturns.
Regardless of these challenges, Advanced Micro Devices, Inc. (NASDAQ:AMD) grew its Q1 2025 revenue by 36% year-over-year to reach $7.4 billion. Whereas gross profits also improved by 46% during the same time to reach $3.74 billion. It is one of the best growth stocks to buy and hold for the long term.
Artisan Global Opportunities Fund stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q4 2024 investor letter:
“Among our top detractors were Advanced Micro Devices, Inc. (NASDAQ:AMD), Novo Nordisk and Danaher. Shares of AMD declined in Q4, which capped off a frustrating year of stock performance that did not seem to match its fundamental progress. Regarding its AI opportunity, the company accomplished everything we had hoped for over the past 18 months. It successfully entered the market with its MI300 graphic processing unit (GPU) chip and raised its latest 2024 AI-related revenue guidance to $5.0 billion from $4.5 billion. However, its shares have experienced weakness for two primary reasons. First is the emergence of custom AI accelerator chip solutions from Broadcom and Marvell (a Q4 buy) as alternatives to the GPU solutions from NVIDIA and AMD. While this competitive threat is more significant than we had initially anticipated, we continue to be excited about AMD’s opportunity moving forward. We believe the AI-related market will grow to $400 billion–$500 billion in the next three years (compared to $100 billion in 2024). We expect that NVIDIA’s market share will fall from ~90%in2024to60%–80%overthesameperiodasitcedes market share to AMD (from5%in2024to10%–20%) and custom accelerator solutions (from 5% in 2024 to 10%–20%). Under these assumptions, we expect AI GPUs to double AMD’s total 2024 sales. Second is cyclical struggles within other areas of its business. While data center revenues have more than doubled over the past two years, the gaming business is down more than 60%, and embedded (specialized chips found in various industrial and consumer products) is down20%.As its data center business continues to grow and the cyclical areas of its business bounce back, we expect AMD to deliver stronger earnings growth.”
