Currently trading around $158 per share, Advanced Micro Devices (NASDAQ:AMD) stock is among the chip stocks that’s seen significant selling pressure since reaching its previous all-time high.
Many investors have looked to other top chip names, such as Nvidia (NASDAQ:NVDA), for the momentum and upside this sector offers. That’s fair.
But at this lower valuation, one has to ask whether AMD stock looks attractive relative to its peers. After all, this is a company that is supported by robust trends within the AI space, and various AI-driven business opportunities.
Just this past month, AMD revealed MI325X accelerator for AI. This is set to launch in Q4 2024 and also revealed it upcoming MI350 chip series.
These chips promise enhanced performance for developers looking to build AI applications, and could create a more even playing field in this space between the top two players.
Here’s my take on why AMD stock looks attractive here.
Accelerated AI Data Center
During Computex 2024, AMD revealed their road map for instinct accelerators. The company, along with its VP of Data Center Accelerated Compute, Brad McCredie, sees AMD’s fast innovation pace.
With the MI325X accelerator, it will feature a 288GB of HBM3E memory with six TB per second of bandwidth.
Next year, AMD will also debut their CDNA 4 architecture. The model is said to use 3nm technology and can offer 35 times better AI inference performance.
By 2026, the Instinct MI400 series, powered by the forthcoming CDNA “Next” architecture, will further enhance performance and efficiency for large-scale AI training and inference.
AMD’s MI300X accelerators have been adopted by major partners like Microsoft Azure, Meta, and Lenovo, thanks to their strong performance and value.
The AMD ROCm six software stack enhances popular large language models, providing 1.3 times better inference performance on Meta’s Llama-3 70B.
Jim Cramer is All About AMD
A caller asked Jim Cramer about a long-term chip manufacturing investment alternative to Nvidia, suggesting Intel. Cramer recommended AMD instead, noting its potential to rival Nvidia.
The semiconductor company also has a stronghold in the data center market. It saw a significant increase in data center revenue, with operating income also reaching 26%.
As a global chipmaker, AMD is showing resilience despite underperforming in the past years. Lisa Su is confident that AMD will be one of the biggest players in AI, and she proved the market wrong by currently being Nvidia’s strongest rival.
While AMD’s stock responded positively to new AI-focused GPU products, some exposure was reduced for risk management, maintaining belief in its potential for significant market share gains and higher earnings.
Green Light for AMD Stock
The introduction of MI300 AI accelerators has significantly bolstered AMD’s quarterly net income.
The company’s expansion into the AI-enabled PC market positions it for increased market share as demand grows.
With a robust presence in various tech sectors, AMD is well-positioned for future growth amid rising demand for AI chips.
On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
