We recently compiled a list of the 10 AI News Investors Probably Missed. In this article, we are going to take a look at where Advanced Micro Devices, Inc. (NASDAQ:AMD) stands against the other AI stocks.

A December 30 report by CNBC discussed the rapid adoption of generative AI by businesses, its potential to significantly impact global GDP, and the varying perspectives of leaders on its future. As per the report, generative AI has evolved from a novelty to a key tool for businesses, with nearly two-thirds of organizations using it for tasks like customer service automation and data analysis. While its growth could potentially boost global GDP by $7 trillion in the next decade, opinions among business leaders vary. Jamie Dimon and Bill Gates view AI as transformative, comparing it to past technological breakthroughs.

However, Sundar Pichai and Satya Nadella caution that further advancements will be slower, requiring deep innovation. Meanwhile, concerns about AI’s ethical risks, highlighted by Warren Buffett and Mark Cuban, suggest the technology could have unintended consequences, despite its growing importance in industries like defense.

READ ALSO: 9 Important AI News and Ratings on Investors’ Radar and 10 AI News Investors Shouldn’t Miss.

Open-Source AI from China Takes on Major U.S. Models with Fractional Costs

CNBC’s TechCheck anchor, Deirdre Bosa reported on December 30 that DeepSeek, an open-source AI model developed by a Chinese research lab, has emerged as a serious competitor to leading models like GPT-4 and LLaMA 3.1. Despite using lower-cost H800 chips, which are less powerful versions of the H100, DeepSeek outperformed these models in key benchmarks and was built for just $5.5 million, a fraction of the cost of other frontier models that require hundreds of millions or even billions to develop.

This signals a shift toward more commoditized AI models, where progress relies less on building new infrastructure and more on optimizing existing models. The development raises concerns for investors in major U.S. tech companies, as it challenges the long-standing dominance of firms like OpenAI. Additionally, the success of DeepSeek highlights the potential advantage of open-source models, suggesting that nations like China, without access to the latest chips or massive investments, could still compete effectively in the AI race, Bosa mentioned. The implications of this development, particularly for the U.S.-led AI dominance and global geopolitical dynamics are expected to unfold further in 2025.

For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. We listed the stocks in ascending order of their hedge fund sentiment taken from Insider Monkey’s database of 900 hedge funds.

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).

Advanced Micro Devices, Inc. (NASDAQ:AMD)

Number of Hedge Fund Holders: 107

Advanced Micro Devices, Inc. (NASDAQ:AMD) is known for its semiconductor solutions, providing processors and GPUs for data centers, gaming, and embedded systems. The company emphasizes delivering high-performance computing products designed for AI-driven applications.

Northland Capital rated AMD as Outperform with a price target of $175, highlighting more upside than risks for 2025. AMD is projected to gain market share in AI GPUs, server CPUs, and PCs as challenges in embedded and gaming segments ease. AI revenue is estimated to grow from $5.2 billion in 2024 to $9.5 billion in 2025, with the MI325X competing well against Nvidia. In server CPUs, AMD’s Turin chips are expected to outperform Intel’s Granite Rapids, with non-AI data center revenue projected at $8.5 billion in 2025. In PCs, AMD may benefit from increased demand as Windows 10 support ends, potentially driving client revenue beyond $9 billion. The firm said:

“AMD remains one of our top picks for calendar year 2025. We anticipate AMD will continue gaining market share in AI GPUs, server CPUs, and PC clients as the headwinds from embedded and gaming segments subside. AMD’s AI strategy is driven by its roadmap and Total Cost of Ownership (TCO) advantages, while its server and client CPU products outperform competitors. The PC refresh cycle could be stronger than current expectations, presenting significant upside to calendar year 2025 estimates.”

Embedded revenue is recovering, with a projected $4 billion in 2025, while gaming revenue is expected to stabilize after a significant decline in 2024. Overall, AMD’s roadmap and competitive positioning suggest strong growth potential. “We believe AMD’s roadmap, strong competitive positioning, and market dynamics present significantly more upside to CY25 than risks,” the firm added.

Overall, AMD ranks 2nd on our list of AI news that investors probably missed. While we acknowledge the potential of AMD as an investment, 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.