Bank of America Securities recently warned that Advanced Micro Devices Inc (NASDAQ: AMD) could find it incrementally difficult to gain market share in 2025.
But it looks like the rest of the Wall Street does not particularly agree with its experts.
More than half of the analysts who cover AMD stock currently rate it at “buy” and expect it to rally a minimum of 20% in 2025.
Additionally, the chipmaker is seeing significant interest from billionaires as well.
AMD stock is attracting massive institutional interest
Advanced Micro Devices has become a favourite for a number of billionaire-led hedge funds.
These include:
- Coatue Management led by Philippe Laffont
- D.E. Shaw & Co led by David Shaw
- Citadel led by Ken Griffin
- Viking Global led by Andreas Halvorsen
Together, these funds currently own more than 32 million shares of the chipmaker.
That’s on top of 130 million and 149 million for BlackRock and Vanguard’s index funds.
Such a massive institutional interest in AMD stock suggests it’s likely on the right track. After all, you don’t get to attract those veterans out of pure luck only.
AMD chips power world’s fastest supercomputers
The aforementioned billionaires as well as Wall Street analysts are positive on Advanced Micro Devices as it stands to benefit from the artificial intelligence tailwinds.
The multinational has a line of “Instinct” chips for AI training that may not beat the most sophisticated products from Nvidia.
But other benefits coupled with AMD chips, such as affordability and lower electric power consumption, should not be overlooked either.
In fact, these benefits are why half of the top ten highest-performance supercomputers in the world currently use Instinct chips, while Nvidia’s Grace Hopper, A100, and H100 power only three of them.
AMD stock does not currently pay a dividend, though.
AMD vs Nvidia: who has a more attractive valuation?
Finally, shares of Advanced Micro Devices are much more attractive in terms of valuation.
They offer ample exposure to the AI mania at 25 times forward earnings and 8.5 times trailing sales.
In comparison, peer Nvidia is currently going for 31 times and 29 times, respectively.
So, the chipmaker may not be able to grow as quickly as NVDA – but its valuation more than makes up for that expected discrepancy.
All in all, AMD stock has significant opportunity in compute and silicon space and its shares offer means to play continued upside in data centres, as per Piper Sandler analyst James Fish.
In October, the AI chips company said its data centre sales doubled in its third financial quarter.
AMD reported $6.82 billion in overall revenue at the time – well ahead of $6.71 billion that experts had forecast.
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