After introducing its inaugural product for generative AI end-users, Advanced Micro Devices (NASDAQ: AMD) has witnessed a significant surge in its stock value in recent months, soaring by more than 80%. This upward trajectory may continue, fueled by upcoming catalysts that promise further growth.
The introduction of the MI300 chip is poised to bolster AMD’s operational efficiency. The addition of these supplementary hardware offerings could propel the already-popular AI stock to even greater heights, triggering another wave of substantial growth.
Rationale Behind the Initial Surge in AMD Stock Due to the MI300 Launch
Critics of Advanced Micro Devices’ foray into AI may argue that the stock has experienced an overly rapid ascent. With a remarkable 157.5% increase over the past year, some believe that the valuation already reflects the AI-driven momentum.
Yet, I hold a different perspective. The potential implications of this growth trajectory are not fully factored in, and the current stock prices may only partially capture the anticipated positive impact from the MI300 chip, both in the present year and beyond.
These forecasts might be conservative, especially considering the company’s projected $3.5 billion profits from the MI300 chip sales this year. Such revenue streams are poised to significantly enhance Advanced Micro Devices’ financial performance in the current fiscal year.
For instance, analysts at Citigroup anticipate MI300 sales to potentially reach \(5 billion in the current year and surge to \)8 billion by 2025.
Moreover, apart from the MI300 chip, the company stands to generate substantial revenue from the sale of additional AI device products in the upcoming years.
Seizing a Lucrative Opportunity in the AI Chip Market
Nvidia (NASDAQ: NVDA), currently holding an “A” rating in Portfolio Grader, stands as the frontrunner in the AI chip sector.
Despite Nvidia’s dominant position, AMD, positioned as the “next mover,” is well-positioned to thrive in this competitive landscape. Notably, there is a significant opportunity for subsequent entrants to capture market share as the demand for AI chips transitions towards more advanced applications.
Advanced Micro Devices asserts that its AI chips outperform Nvidia’s in terms of efficiency. Additionally, the company is targeting the burgeoning AI-PC market as a segment where it can secure a substantial market share.
With an estimated 54.5 million AI-capable devices set to be shipped soon, this figure could surge to 167 million by 2027. The portable device AI chip market also presents a lucrative avenue for growth, offering AMD additional opportunities for expansion.
Positioning for Comprehensive AI Exposure with AMD Stock
Long-term revenue forecasts for AI chip companies tend to vary widely, with sell-side estimates for 2025 spanning a broad spectrum, particularly in AMD’s case.
While conservative estimates hover around \(3.52 per share, more bullish projections anticipate earnings of up to \)9.05 per share in the coming year, representing a substantial improvement from the consensus forecast of $3.65 per share for 2024.
It is plausible that AMD could witness a significant uptick in earnings this year and beyond, despite the multitude of variables at play. Therefore, AMD stock remains an attractive complement to NVDA stock for investors seeking comprehensive exposure to the AI sector. Existing positions can be maintained, with the option to refine or expand them as needed.
AMD stock garners an A grade in Portfolio Grader, signifying its strong performance in the market.
At the time of publication, Louis Navellier held a long position in NVDA. The article’s author, a member of the InvestorPlace Research Staff, did not have any direct or indirect holdings in the stocks discussed.
