Shares of Advanced Micro Devices (AMD) have reached an all-time high as blockbuster earnings from rival Nvidia (NVDA) boost confidence in the AI buildout and the chipmakers powering it.
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NVDS: built for a short position on NVDAAMD stock traded at a record high of $469.87 early on May 22, marking a significant milestone for the semiconductor company. AMD, as the company is known, now has a market capitalization of $734.76 billion.
The company’s shares have doubled this year and risen more than 300% in the last 12 months fueled by demand for its microchips and processors at AI data centers. Analysts say that the latest leg higher in AMD stock is the result of Nvidia’s blockbuster quarterly results, which are lifting the entire chip sector. Shares of other chipmakers such as Intel (INTC) are also marching higher.
AMD’s operating income by segment. Source: The Fly
Nvidia’s Strong Print
Nvidia’s financial results for this year’s first quarter beat Wall Street forecasts on the top and bottom lines. The company reported that its profit tripled year-over-year (up 211%), while its sales rose 85% from a year earlier.
At the same time, Nvidia increased its quarterly dividend by 2,400% to $0.25 per share from $0.01 previously. And the company announced a new $80 billion stock buyback program as it focuses on returning value to shareholders.
Analysts say that Nvidia’s latest print has raised confidence on Wall Street that the AI buildout and trade are real, profitable and growing, helping to lift the entire sector, including AMD stock.
Comparing Chip Stocks
Let’s look at the three chip stock mentioned in this article: AMD, Nvidia and Intel. As one can see in the chart below, AMD and NVDA stocks each have a Strong Buy rating while INTC stock carries a Hold recommendation. Of the three stocks, only Nvidia has more upside in its share price.
