Advanced Micro Devices (NASDAQ:AMD) has been putting up solid numbers — impressive revenue growth, healthy profit margins, and steady progress. The big dig? The company is, well, not Nvidia.
To put things in perspective, AMD pulled off a record-breaking Q4 with $7.7 billion in revenue, up 24% year-over-year. Non-GAAP gross margins ticked up to 54%, an improvement from 51% in the same quarter last year. But when you stack that next to Nvidia’s $38.3 billion haul 75% margins, AMD’s solid quarter starts to look more like a warm-up act.
Still, not everyone’s counting AMD out. One investor, known by the pseudonym SL Investments, argues the fundamentals remain strong and that it’s only a matter of time before the market catches up to the company’s stellar performance.
“AMD’s growth momentum is strong, with an expectation for the current trend to continue for the foreseeable future,” asserts the investor.
Yes, the Q1 2025 revenue guidance came in soft at $7.1 billion — a step down from last quarter and short of Wall Street hopes. But SL argues that this is a reflection of AMD’s cyclical business, not a sign of weakness. In fact, based on the guidance, the company is still projected to grow full-year revenues by a healthy 29.1% and expand margins by 7% in 2025.
In addition, there is plenty of growth on the horizon, which should spur massive demand for AMD’s products. SL cites an industry report that forecasts data center spending will total $1.8 trillion between 2024 and 2030.
As for the worries about AMD’s inability to compete against Nvidia, SL believes this argument misses the point: “To this claim, I would like to argue that an investment in AMD is not about competing with Nvidia for the GPU demand in the data center market but capturing the CPU market created as a result of the data center boom that Nvidia started, AMD is excelling in this market.”
In other words, AMD is clearly on the right track. The poor market sentiment – both at large and particular with AMD – therefore presents a great opportunity to increase a position.
“I believe the current sour sentiment and strong growth create an environment for a higher high,” concludes SL, who rates AMD shares a Buy. (To watch SL Investments’ track record, click here)
This seems to be the general sentiment among Wall Street as well. With 25 Buy, 11 Hold, and 1 Sell rating, AMD holds a Moderate Buy consensus rating. Its 12-month average price target of $147.81 would yield gains just shy of 30% in the year ahead. (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.