Advanced Micro Devices (NASDAQ:AMD) experienced a turbulent trading day, reflecting a broader decline in AI-related stocks. The market was taken by surprise when Chinese startup DeepSeek unveiled an open-source AI assistant that achieved impressive performance using less advanced and more affordable chips. This development challenged the prevailing notion that high-quality AI models require substantial investments in advanced hardware, leading to a sharp sell-off and causing AMD shares to drop by ~6%.
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This drop follows a disappointing 2024 for AMD, during which the stock declined nearly 20%, even as enthusiasm for the AI sector surged. A major factor behind the market’s lukewarm response to AMD lies in Nvidia’s overwhelming dominance in the data center space.
However, one investor, known by the pseudonym Oakoff Investments, believes the disappointment in AMD, especially following the company’s recent CES presentation, is misplaced.
“AMD’s AI-focused processors and new GPU releases at CES 2025 position it well against Nvidia, with potential market share gains,” the investor opined.
Disputing the prevailing wisdom, Oakoff was encouraged by a number of AMD’s product updates at CES, including the company’s AI processor lineup and graphics technology. The investor was encouraged by AMD’s AI processor series, including its Ryzen AI Max+395, which outperformed rival products in 3D rendering, graphics, and LLMs.
“I wouldn’t write AMD off the GPU competitive landscape just yet,” advises Oakoff, adding that the upcoming MI350 series could deliver “stiff competition” to Nvidia’s Blackwell architecture.
In addition, Oakoff identifies some positives in AMD’s low expectations vis-à-vis Nvidia, as it allows AMD to enjoy both lower valuations and higher rates of growth. Comparatively speaking, looking five years ahead, AMD has a much higher projected CAGR of 28.4% versus NVDA’s CAGR of ~14.6%.
Looking at the current year, Oakoff expects the growth of AI PCs to provide additional support for AMD’s prospects. The investor cites an industry report that anticipates demand for PCs will be increasing, which should be quite the boon for AMD.
“AMD is set to be strongly positioned as its AI-focused processors should help it capitalize on this trend more quickly compared to others,” Oakoff stated.
Believing the stock has double-digit upside potential, and amid the growing negativity surrounding AMD’s future, Oakoff has upgraded AMD shares to a Strong Buy. (To watch Oakoff Investments’ track record, click here)
Shifting to Wall Street, AMD holds a Moderate Buy consensus rating based on 22 Buy recommendations, 10 Holds and a single Sell. Its 12-month average price target of $170.67 implies ~48% upside potential for the coming year. (See AMD stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
