Advanced Micro Devices (NASDAQ:AMD) has significantly changed the landscape of the CPU space, a domain once dominated by Intel. By offering superior products and capitalizing on Intel’s various missteps, AMD has managed to close the gap considerably with its once-far-bigger rival.
Now, faced with Nvidia (NASDAQ:NVDA) being the runaway leader in the Data Center world, can AMD repeat its trick and rein in the Lord of the Chips?
For investor Bluesea Research, AMD should be considered as the most likely company to do so.
“AMD is the second-best option in the AI chips, and it is likely that the market share of the company will increase over the coming quarters as new iterations bridge the gap with market leader Nvidia,” the investor said.
Nvidia has secured its market-leading position by capturing the lion’s share of AI chip sales, virtually cornering the market. However, AMD’s growth trajectory, while not as dramatic, is also on the rise. Looking ahead, Bluesea emphasizes that the “most important metric” for AMD will be the growth trajectory within its Data Center business. AMD has raised its 2024 Data Center GPU sales estimate by 11%, from $4 billion to $4.5 billion, following an earlier increase from $3.5 billion to $4 billion earlier this year. This suggests a clear upward trend is emerging.
Here it’s worth mentioning again that AMD took advantage of stumbles at Intel and considering the recent delay with Nvidia’s Blackwell architecture, AMD could “gain clients in this critical segment.”
Additionally, considering the huge strides made so far by Nvidia, Bluesea makes the case that it has a “limited scope of increasing market share.” Meanwhile, AMD’s market share is still rather small but it is partnering with many large cloud hyperscalers, and therefore getting behind the “second-best option” brings the potential for better long-term returns vs. the market leader.
“The increase in market share of AMD’s AI chips could deliver a strong bullish sentiment to the stock,” Bluesea summed up. “This should allow the stock to outperform Nvidia and other rivals.”
Understandably, then, Bluesea rates AMD a Strong Buy. (To watch Bluesea’s track record, click here)
That is also the conclusion reached by the analyst consensus, a rating based on a mix of 28 Buys vs. 6 Holds. The average target currently stands at $190.90, indicating gains of 28.5% lie in store 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.
