A surge in artificial intelligence (AI) sparked a seismic wave last year, propelling the Nasdaq Composite to a staggering 43% ascent in 2023. This surge became a mainstay growth driver in the tech realm, with Wall Street wagering on the firms best positioned to capitalize on the AI boom in the years to come.

AI Market Trajectory

The AI market, having hit the $200 billion mark in 2023 according to Grand View Research, shows no signs of cresting. Prognosticators foresee an eye-watering compound annual growth rate of 37% continuing until at least 2030, potentially catapulting the industry to nearly $2 trillion by decade’s end.

The domain of AI has metamorphosed many into millionaires in recent times, yet its evolutionary saga remains far from its closing stanza. AI’s transformative abilities transcend sectors, pervading industries as diverse as consumer tech, cloud computing, autonomous vehicles, e-commerce, and beyond.

The Vanguard in GPU Sales: Advanced Micro Devices

Within this maelstrom of AI fervor, chip stocks have commandeered the spotlight thanks to the burgeoning demand for AI services, illuminating the indispensable realm of graphics processing units (GPUs), essential for AI model training and execution.

While Nvidia basks in the glory of triumph within this sphere, boasting a stellar stock surge of 296% over the past year fueled by amplified chip sales, a pall of doubt casts aspersions on its rivals as meritorious contenders for investment vitality over the long haul.

Amidst this milieu, emerges Advanced Micro Devices (NASDAQ: AMD) as a compelling candidate. Garnering the second-largest slice of the GPU market pie and fortified by promising prospects within AI, AMD seized the spotlight with the launch of its MI300X AI GPU last December. Elicitating nods of approval from tech behemoths such as Microsoft and Meta Platforms, AMD aims to etch its narrative within the annals of AI lore by accentuating its focus on AI-driven PCs, invigorating PC shipments and AI integration alike.

Forecasts herald AMD’s stock trajectory, hinting at an earnings zenith of over $7 per share in the upcoming two fiscal years. Applying a forward price-to-earnings ratio of 53 suggests a prospective stock value surge to $383, portending a 96% hike by fiscal 2026.

Intel’s Renaissance Amidst Adversity

Intel (NASDAQ: INTC), once the stalwart dominator of the CPU market arena with an over 80% stranglehold and a coveted role as Apple’s MacBook chip supplier, faced a reckoning in recent years. Faced with nimble competitors chipping away at its CPU pie, Intel witnessed its market share dwindle to 69%, culminating in Apple’s decisive pivot to in-house hardware designs in 2020.

Intel’s stock bore the brunt of this reshuffling, registering a 31% downturn over the past triennium. However, this adversity catalyzed a rekindled verve within Intel, manifesting in a strategic recalibration last June with a shift to an internal foundry model, envisaging a $10 billion savings by 2025. Emulating the modus operandi of Taiwan Semiconductor Manufacturing, Intel seeks to pivot into a preeminent foundry capacity provider in North America and Europe, envisioning a transition fraught with enhanced efficiency and profitability marked by a projected non-GAAP gross margin of 60% and an operating margin of 40%.

Augmenting this transformation, Intel now weaves an AI narrative into its fabric, unveiling a gamut of AI-oriented chips including the Gaudi3 GPU in December, designed to rival Nvidia’s offerings. Subsequent showcases such as new Core Ultra processors and Xeon server chips underscore Intel’s commitment to harnessing neural processing units for AI program execution prowess.

Intel’s earnings are envisaged to crest near $3 per share by fiscal 2026, with a forward price-to-earnings ratio of 32 painting a possible ascent to $96, signaling a 123% growth spurt during the ensuing biennium.

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