Advanced Micro Devices (NASDAQ:AMD) stock has finally caught up with the AI rally that’s been rewarding investors across the tech sector for the past few years. After a difficult stretch, AMD shareholders are now beginning to see their patience pay off.
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Following months of volatility and underperformance, AMD shares have staged a major comeback. Since hitting a 52-week low in early April, the stock has soared nearly 90%. Much of this momentum can be traced to the company’s strong revenue growth – especially in the all-important data center segment, which jumped 57% year-over-year last quarter – as well as the recent launch of its latest MI350 GPUs in June.
This new GPU launch has proven to be a turning point. The MI350 chips, which the company says can deliver a 35x increase in inferencing performance, are now viewed by analysts as real contenders to take market share from the industry’s dominant player, Nvidia.
That intensifying rivalry is just one reason investor Kevin George believes the gains of the past few months could be just the beginning.
“I believe AMD is in a strong position to reward investors with AI growth,” asserts the 5-star investor.
George cites recent analysis lauding the MI350’s strong performance, which should drive earnings this year and next. In fact, the promise of MI350 recently convinced one investment bank to increase its price target on the stock to $200 (See here).
George also sees AMD’s growing partnerships as a major tailwind. He notes that some of the world’s biggest tech companies are now working with AMD – a clear signal that the company is increasingly viewed as a reliable partner in the AI space.
“AMD’s partnerships with OpenAI, Microsoft, Meta, and others validate its AI ecosystem and expand its market opportunity,” adds George.
Moreover, even if AMD does not succeed in going head-to-head with Nvidia, George still sees opportunity up ahead. For instance, the company’s Ryzen chips are dominating the gaming industry, helping AMD’s Client & Gaming division to improve margins from 10% to 17% over the past year.
“The company’s performance over the last year has also created a strong foundation that can limit the downside if the plans to compete with Nvidia don’t materialize,” concludes the investor, who is giving AMD shares a Buy rating. (To watch George’s track record, click here)
Meanwhile, Wall Street’s view on AMD is mixed at current levels. The stock holds a Moderate Buy consensus, based on 25 Buy ratings and 10 Holds. Still, the recent surge in AMD’s share price has outpaced expectations: the 12-month average price target stands at $135.97, which is ~7% below the current share price. (See AMD stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.