Jim Cramer said Advanced Micro Devices, Inc.’s (NASDAQ:AMD) push into artificial intelligence has opened another growth opportunity as the industry shifts from model training toward inference and agentic AI. During the September 28 episode of Mad Money, Cramer pointed to AMD’s roughly 13% gain the previous week and its brief move above a $1 trillion market capitalization.
AMD’s latest results provide some support for that view. Second-quarter revenue rose 50% year over year to $11.5 billion, while Data Center revenue more than doubled to $6.7 billion. AMD expects approximately $13 billion of third-quarter revenue, implying roughly 41% year-over-year growth and 13% sequential growth at the midpoint. Lisa Su said AMD entered the second half with “strong momentum” as EPYC demand accelerates, Instinct deployments scale and Helios begins to ramp. She also said AI is driving “a significant expansion in demand for compute across all of our markets.” Its important to note that this isn’t the first time Cramer has been bullish on AMD.
Cramer Credits Lisa Su With AMD’s Turnaround
Cramer attributed AMD’s transformation largely to Su, who became CEO in October 2014 when the company was struggling in its core CPU markets. He went on to say, “Since Lisa Su came in, AMD’s rallied an astonishing 18,433%.” He added:
For a chipmaker, product development cycles take multiple years, and it’s not enough to have just strong one-off products from time to time. You need to present a clear product roadmap that gives tech customers the confidence to design your chips into future iterations of their products. AMD did exactly that, gradually winning the confidence of both customers and Wall Street.
Advanced Micro Devices, Inc. has since expanded beyond CPUs into GPUs and AI accelerators, with Data Center accounting for 58% of total revenue in the second quarter.
AMD Expands Its AI Strategy
Cramer mentioned that NVIDIA remains ahead in high-end AI accelerators while arguing that AMD has become a meaningful competitor. The company is also expanding its AI strategy through the planned acquisition of World Labs. It announced on September 28 that it had agreed to acquire the AI model developer for approximately $8.2 billion in an all-stock transaction. World Labs co-founder Fei-Fei Li is expected to join AMD as executive vice president and chief scientist following the deal’s expected closing by the end of 2026. Su said, “Building the compute platforms for the next generation of AI requires a deep understanding of how models are evolving.” AMD may be a buy, but its certainly not cheap. Here is a list of 10 Best AI Stocks to Buy Under $25.
AMD’s Rally Leaves Expectations Exposed
Cramer’s comments also provide a more cautious angle on Advanced Micro Devices, Inc.’s recent rally. He said the latest leg higher was “in part a stroke of good luck,” referring to the market’s shift toward inference and agentic AI and the resulting expectations for CPU demand. AMD’s third-quarter revenue outlook calls for approximately 41% year-over-year growth at the midpoint, compared with 50% growth in the second quarter. AMD is at approximately 39.5x forward earnings. The stock is trading at a valuation that reflects expectations for continued growth in its AI and Data Center businesses.
AMD’s own filings point to a more concrete risk. The company said U.S. export restrictions affect its MI308 products and that sales of those chips into China depend on customer demand, China’s import-control rules, and AMD’s ability to obtain licenses. It said those factors could negatively affect its revenue and operating results. There is also a margin comparison issue. AMD reported a 54% GAAP gross margin in the second quarter, up from 40% a year earlier, but the company said the prior-year period included $800 million of inventory and related charges tied to U.S. export controls on MI308 products. That makes the year-over-year margin improvement less straightforward than the headline percentage suggests.
The company is still growing rapidly, but the shares also carry a high forward earnings multiple, making the pace and quality of that growth particularly relevant to the valuation. Furthermore, Cramer’s point that NVIDIA remains the “top dog” also highlights the competitive hurdle AMD still faces in AI accelerators.
Hedge Fund Ownership, Valuation and Short Interest
Institutional positioning increased in the second quarter. As per Insider Monkey, which tracks more than 1,000 hedge funds, 164 hedge funds held AMD in Q2, up from 134 in Q1. Short interest was comparatively modest heading into the second half of September at 2.46% of the public float.
When it comes to valuation, trading at 39.53x forward earnings, AMD sits above NVIDIA at nearly 25x, while remaining below Intel’s 63.3x multiple. These divergent valuation multiples tell distinct stories about how the market prices each chipmaker’s near-term earnings power and long-term trajectory. NVIDIA’s forward multiple near 25x indicates that its staggering earnings growth has largely caught up with its market capitalization, bringing its valuation closer to historical sector baselines even as it maintains an iron grip on AI infrastructure. By contrast, AMD’s higher 39.53x multiple reflects aggressive growth expectations, pricing in future market share gains in high-performance computing and expanding AI accelerator deployments. Meanwhile, Intel’s high 63.3x multiple illustrates a classic turnaround distortion. Investors are paying a steep premium for future foundry recovery and cost-discipline milestones rather than immediate profit generation.
Cramer’s comments pointed to the scale of Advanced Micro Devices, Inc.’s transformation while also highlighting the expectations surrounding its latest rally. The company’s expanding AI business has given investors a new source of growth, but Cramer’s observation that the latest advance was partly driven by the shift toward inference and agentic AI remains an important part of the discussion around the shares.
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