A Hidden Gem in the Tech Sector?
As the tech industry continues to evolve, one company that has flown under the radar is Advanced Micro Devices (AMD). Despite its long-term potential, AMD’s stock has struggled this year, down 15% year to date and nearing its 52-week low. But could this be an opportunity to invest in a company with tremendous growth potential?
A Tale of Two Growth Stocks
AMD’s peer, Nvidia, has been a darling of the tech sector, with a market cap of $3.2 trillion, more than 16 times AMD’s $200 billion. Nvidia’s revenue growth rate has been impressive, leaving AMD in its shadow. However, AMD is working to change this narrative.
A Catalyst for Growth
AMD anticipates record revenue for 2024, driven by significant growth in multiple areas of its business. While investors may be unimpressed by AMD’s recent performance, the company is poised for an acceleration of its growth rate in the fourth quarter. Management projects sales of around $7.5 billion, a 22% increase from the prior-year period.
Competing in the AI Chip Market
AMD is aggressively pursuing a piece of the AI chip market, where it could potentially steal market share from Nvidia. With the launch of its MI325X chip, which is 30% faster than Nvidia’s H200, AMD is well-positioned to offer a competitive alternative to companies seeking cheaper chip options or looking to diversify their supply chains.
Underrated and Overlooked
Despite its recent struggles, AMD may be an underrated stock to hold in the new year. With its new chip rolling out to customers and an anticipated acceleration of its growth rate, the pieces are in place for the stock to perform better in 2025. Trading at a forward price-to-earnings multiple of 25, AMD may be a more comfortable purchase for long-term investors.
Don’t Miss Out
If you’re worried about missing out on the next big opportunity, now may be the time to consider investing in AMD. With its potential in the AI chip market and its undervalued stock, AMD could be one of the better stocks to buy right now. Don’t let this opportunity slip away.
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