5. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders as of Q4: 96
Adage Capital Management’s Equity Stake: $170.35 Million
Upside Potential as of May 2: 38.84%
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a leading American multinational technology company headquartered in Santa Clara, California, with substantial operations in Austin, Texas. As a fabless semiconductor company, AMD specializes in designing and developing high-performance computing components, including central processing units (CPUs), graphics processing units (GPUs), field-programmable gate arrays (FPGAs), and system-on-chip (SoC) solutions. The company serves diverse sectors, ranging from gaming and embedded systems to data centers and artificial intelligence (AI). AMD’s innovative hardware plays a critical role in powering both consumer devices and enterprise-scale computing infrastructure.
In its financial results for the fourth quarter and full year of 2024, Advanced Micro Devices, Inc. (NASDAQ:AMD) reported significant achievements across several business segments. Fourth-quarter revenue reached a record $7.7 billion, with a GAAP gross margin of 51%, operating income of $871 million, and net income of $482 million. Diluted earnings per share were $0.29. On a non-GAAP basis, the company delivered even stronger results, including a 54% gross margin, $2.0 billion in operating income, $1.8 billion in net income, and $1.09 in diluted earnings per share.
CEO Dr. Lisa Su described 2024 as a transformative year for the company, marked by accelerated growth in AMD’s Data Center segment. Annual revenue in this division nearly doubled, fueled by the rapid adoption of EPYC processors and over $5 billion in AMD Instinct accelerator revenue. In Q4 alone, Data Center revenue soared to a record $3.9 billion, reflecting a 69% year-over-year increase. The Client segment also saw robust performance, with quarterly revenue rising 58% year-over-year to $2.3 billion, driven by strong demand for Ryzen processors. Conversely, the Gaming segment experienced a 59% decline to $563 million, attributed to a drop in semi-custom revenue. The Embedded segment posted $923 million in revenue, a 13% decline amid fluctuating market demand. Looking ahead to 2025, Advanced Micro Devices, Inc. (NASDAQ:AMD) anticipates continued growth, leveraging the strength of its product portfolio and increasing demand for adaptive and high-performance computing solutions.
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.”
