It can be easy to overlook Advanced Micro Devices (NASDAQ:AMD), the AI chipmaker which constantly seems to be in the shadow of the industry-leading Nvidia, whose precedent-setting growth over the past few years has been the stuff of legend. AMD, on the other hand, has been struggling.
Indeed, AMD’s stock price sunk throughout the second half of 2024, a slump that has continued during this year as well. Shares reached a 52-week low point this week.
And yet, the company has delivered impressive revenue growth, especially in the all-important data center segment. In 2024, for instance, AMD data center sales were a record $12.6 billion, up 94% year-over-year.
Though the market has yet to reward AMD commensurately, one investor known by the pseudonym Simple Investment Ideas believes that this could be changing as the use of AI agents becomes more widespread.
“The arrival of OpenAI’s Deep Research is a sign that highly inference-intensive AI Agents are ready for prime time,” states the 5-star investor. “AMD’s high-memory Instinct GPUs and EPYC CPUs give the company a competitive edge by reducing latency and operational costs.”
Simple explains that Nvidia’s products tend to supply up to 80 GB or 141 GB of high-bandwidth memory per card. AMD’s MI300X, on the other hand, has the capacity to provide up to 192 GB. The investor details that this is important because advanced AI agents require massive amounts of GPU memory to conduct real-time inference.
In addition, AMD’s cheaper pricing options could become a deciding factor for many companies. “This pricing differential becomes even more important in multistep AI agents, as thousands of continuous inference calls can balloon operating expenses,” notes the investor.
Simple even suggests that AMD’s hardware could become the preferred solution for those companies and organizations who operate on tighter budgets.
“With next-generation agent applications expanding the total pool of GPU demand far beyond single-step model deployments, AMD is poised to turn that credibility into tangible market share gains,” concludes Simple, who rates AMD a Buy. (To watch Simple Investment Idea’s track record, click here)
Wall Street is also feeling good about AMD. With 25 Buy, 11 Hold, and 1 Sell rating, AMD holds a consensus Moderate Buy rating. Its 12-month average price target of $147.88 has an upside of more than 40%. (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.