We recently published a list of 12 Most Profitable Growth Stocks To Invest In. In this article, we are going to take a look at where Advanced Micro Devices (NASDAQ:AMD) stands against other most profitable growth stocks to invest in.

After the September inflation report, the market did feel a slight bit of panic but it seems to be fading away. After the report, the market expectations for a rate cut shifted, with 79.9% of participants predicting a cut to 450-475 basis points, while 20.1% expect the rates to remain unchanged. It was a change from 32.1% expecting a 50 bps rate cut and 67.9% anticipating a 25 bps cut at the beginning of the month as mentioned in our 8 Most Profitable Blue Chip Stocks to Invest in article.

However, on October 11, the CME FedWatch tool showed that 89.5% of the market now expects a 25 bps rate cut and the rest expect it to remain the same.

Market Corrections Ahead but No Bear Market in Sight

Christian Mueller-Glissmann from Goldman Sachs joined CNBC’s ‘Squawk Box’ to discuss the latest market trends. He believes that the stock market pullback in August could be a warning of more potential corrections, but he does not see a severe bear market ahead. His overall outlook is positive due to a healthy macroeconomic environment, where growth remains stable, inflation is under control, and central banks are starting to reduce rates. These factors create a favorable setting for equities and other risk assets.

He pointed out that while bullish market positioning contributed to August’s setback, the combination of declining inflation and rate cuts allows central banks to cushion against financial shocks, minimizing the risk of a deep downturn.

Mueller-Glissmann highlighted two key reasons for not expecting a major market decline: inflation has significantly dropped, giving central banks more flexibility, and price momentum over the past 6-12 months suggests a strong macroeconomic backdrop. With the labor market improving, he sees no signs of an economic downturn.

His strategy focuses on quality growth stocks that are temporarily undervalued and cyclical value stocks that could recover as the market stabilizes. Regarding inflation, he noted a shift from inflation relief to growth as the main market driver, raising concerns about inflation resurfacing if growth strengthens. However, he remains confident that inflation will stay anchored, and disinflation will continue into the year’s end.

Our Methodology

For this article, we used stock screeners to identify nearly 25 growth stocks above the market cap of $10 billion with a 5-year revenue compound annual growth rate (CAGR) of 30% or above. Next, we narrowed our list to 12 stocks with the highest TTM net income. We also mentioned the hedge fund sentiment around each stock, which was taken from Insider Monkey’s Q2 database of 912 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)

5-Year Revenue CAGR: 31.70% 

TTM Net Income: $1.354 billion

Number of Hedge Fund Holders: 108

Advanced Micro Devices, Inc. (NASDAQ:AMD) is a global semiconductor company offering central processing units (CPU), graphics processing units (GPU), accelerated processing units (APU), data processing units (DPU), field-programmable gate arrays (FPGA), and System-on-chip (SoC) for data centers, personal computers, gaming, and embedded systems. It makes it to the 5th spot on our list of most profitable growth stocks.

The company’s data center segment provides server-class CPUs, GPUs, AI accelerators, DPUs, FPGAs, SmartNICs, and Adaptive SoCs designed to advance performance, energy efficiency, and scalability for various workloads. Products include AMD EPYC server processors, AMD Instinct GPUs for AI and supercomputing, Alveo accelerator cards, and Pensando DPUs for optimized data center performance.

These technologies target the growing demands of modern data centers, offering solutions for AI processing, cloud services, and technical computing while improving power and space efficiency.

At Advancing AI 2024, the company introduced a range of advanced AI solutions, including 5th Gen EPYC processors, AMD Instinct MI325X accelerators, and Ryzen AI PRO processors for enterprise AI. The company highlighted its leadership in AI-driven data center solutions with EPYC CPUs, Instinct GPUs, and Pensando DPUs, which power major AI workloads for companies like Google, Meta, and Microsoft.

Its open-source ROCm software also supports over one million AI models. New products like the Ryzen AI PRO 300 Series offer high AI performance and enterprise security. Partners like Dell and Oracle also showed how they use the company’s technologies to drive innovation in AI infrastructure.

Its 5th Gen EPYC processors offer top-tier performance for data center workloads, including AI, cloud, and enterprise applications. Built on the “Zen 5” architecture, these CPUs deliver up to 37% better instructions per clock for AI and HPC tasks. The flagship 192-core EPYC 9965 processor outperforms competitors in AI workloads, with significant gains in performance for business applications, HPC, and virtualized infrastructure.

The EPYC 9575F, optimized for AI, can drive faster results in large-scale AI clusters. These processors also offer energy efficiency, enabling up to 71% less power usage and 87% fewer servers for the same workloads, with wide support from leading OEMs.

On October 10, Roth MKM analyst Suji Desilva maintained a Buy rating and $200 price target on Advanced Micro Devices (NASDAQ:AMD). The analyst believes in a strong opportunity in the growing AI infrastructure sector for the stock. He highlighted the company’s hardware, software platform, and Ethernet networking advancements, especially its EPYC processors, which improve high-scale AI inferencing. Desilva also praised Advanced Micro Devices (NASDAQ:AMD) Instinct GPU roadmap and called it a key part of the company’s integrated AI infrastructure offering.

Overall, AMD ranks 5th on our list of most profitable growth stocks to invest in. 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 timeframe. 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.

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. This article is originally published at Insider Monkey.