The Stupendous Surge of Advanced Micro Devices
Last year, Bank of America analyst Michael Hartnett coined the term “Magnificent Seven” for tech giants like Alphabet, Apple, Microsoft, Nvidia, Amazon, and Tesla. However, amidst the awe-inspiring tech realm, Advanced Micro Devices (NASDAQ: AMD) stands out, outperforming five of these seven members with a remarkable 152% gain over the past year.
AMD’s breakthrough performance can be credited to its expansion in the flourishing AI market, positioning itself as a formidable contender against the industry’s behemoths. As EPS estimates predict a soaring trajectory, potentially eclipsing $400 in the next two fiscal years, the spotlight now shines on AMD as the one AI stock that could feasibly double in value within the next 24 months.
A Glimpse into AMD’s AI Domination by 2024
Recent data from Grand View Research reveals that the AI market soared to nearly $200 billion last year, charting an expected 37% compound annual growth rate up to 2030. This meteoric rise forecasts a nearing $2 trillion zenith, illustrating the untapped horizons for new investors.
While AMD entered the AI arena later than its rival Nvidia, its entrance packs a hefty punch with a lineup of offerings. The latest introduction, the MI300X AI GPU, not only rivals Nvidia’s prowess but has already enticed tech giants like Microsoft and Meta as clients, signaling a promising journey ahead.
Moreover, AMD’s strategic shift in focusing on AI-powered PCs aligns seamlessly with projections of AI integration revolutionizing the PC industry. With IDC forecasting a substantial surge in PC shipments this year, leaping to a prediction that 60% of PCs shipped in 2027 will be AI-enabled, AMD’s future appears radiant within the AI landscape.
With a market cap of $335 billion, AMD’s upward trajectory positions it on a trajectory towards potentially overshadowing a segment of the Magnificent Seven, characterized by trillion-dollar market capitalized stalwarts. Bearing witness to continual stock upswings against tech titans, AMD’s evident prowess in AI showcases substantial growth on the horizon.
EPS Projections Illuminate AMD’s Meteoric Rise
While AMD transitions from a CPU-centric entity to a GPU-centric role, its latest quarterly reports signify a path to progress. Revenue in the fourth quarter of 2023 surged by 10% year-over-year, surpassing analyst expectations and exhibiting substantial growth across its AI-focused data center and client segments.
With EPS estimates hinting at a projection of over $7 per share by fiscal 2026, calculations based on a forward price-to-earnings ratio of 57 anticipate a share price surge to $410, elucidating a remarkable growth surge of more than 100% over the impending two fiscal years.
AMD’s dominance in the AI realm beckons as an unparalleled investment option, surpassing the performance potential of the prominent Magnificent Seven stocks, cementing its status as a definitive buy in the current market climate.
*Stock Advisor returns as of March 11, 2024