Advanced Micro Devices (NASDAQ:AMD) has been fighting an uphill battle, struggling to keep pace with industry titan Nvidia (NASDAQ:NVDA). Even with doubling its data center revenue in 2024 – a milestone that would typically send shares soaring – AMD has shed more than half its value over the past six months. The market, it seems, still isn’t sold on AMD’s ability to narrow the gap.
However, investor Yiannis Zourmpanos believes that this is the wrong way to approach AMD. In fact, according to the investor, second place in the lucrative – and growing – AI market would be just fine and dandy.
“If AMD captures just 15–20% of [the] AI inference market, it becomes a multi-billion-dollar second-source alternative to Nvidia,” asserts Zourmpanos.
The investor points to the changing contours of the AI environs, where the once “exotic” technology has turned into a rather prevalent commodity. The AI focus is pivoting from training massive models to deploying them across real-world applications – and AMD is positioning itself right at the heart of this transformation. In Zourmpanos’ view, that’s where the real opportunity lies.
“Wall Street is still chasing the flash of AI training, but the real gold rush is in inference, and AMD is already laying the tracks,” notes Zourmpanos. “The market hasn’t priced in this pivot from hype to monetization yet, but it will.”
While AMD’s AI chips might lack the pure firepower of Nvidia’s products, the investor argues that they are fully capable of satisfying many other AI-related tasks, especially those required for personal computing. The evidence that this is working is already piling up, with Microsoft, Lenovo, and HP having pledged to use AMD’s chips in their PCs.
“AMD doesn’t necessarily need to win the race in AI chips completely. It simply must be the first-choice alternative, and it’s well-positioned to do so,” Zourmpanos summed up.
With that in mind, Zourmpanos is doubling down on his bullish stance, giving AMD shares a Strong Buy rating. (To watch Zourmpanos’ track record, click here)
Wall Street is largely on board, too. Of the 36 analyst reviews, 24 rate it a Buy, 12 suggest a Hold – and not a single one dares to say Sell. That adds up to a Moderate Buy consensus, with a 12-month average price target of $146.87, implying potential gains of 89% from current levels. (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.