advanced micro device (NASDAQ: AMD) Our inventory has been sold out over the past few weeks. Concerns about slumping computer sales and competition in the artificial intelligence (AI) accelerator market appear to have weighed on the stock price.
On the surface, I can see why AMD is struggling. The company’s sales for the first nine months of 2024 were $18 billion, a 10% increase, but far below the triple-digit sales growth of its main rival, Nvidia. Additionally, AMD’s gaming and embedded division revenue declined by 58% and 38%, respectively, in the first three quarters of 2024.
Nevertheless, long-term trends in the chip market should halt the decline and push the stock higher in the coming years. Here’s why:
Despite competitive concerns, investors shouldn’t discount the AI accelerator business and its ability to fundamentally change AMD. Allied Market Research predicts a compound annual growth rate of 38% for the AI chip market through 2032, indicating that the eight-year period is likely to see significant growth.
Due to the lack of Nvidia accelerators, customers like Microsoft and Meta Platform are also turning to AMD. As a result, data center revenue (including AI accelerators) grew 107% in the first nine months of 2023.
More importantly, the data center division has accounted for 48% of AMD’s revenue so far this year. To date, Nvidia’s data center division accounts for 87% of its revenue for the first nine months of fiscal 2025 (ending October 27). Over time, the data center division could come to account for more of AMD’s revenue, eventually rivaling Nvidia’s 87% share.
In fact, the percentage of revenue from the data center segment may even decline due to recovery in other segments. But whatever the revenue stream, improving growth likely means AMD stock will thrive over the next eight years.
Before buying Advanced Micro Devices stock, consider the following:
Motley Fool Stock Advisor’s team of analysts has identified the 10 best stocks for investors to buy right now. Advanced Micro Devices was not among them. These 10 stocks have the potential to generate impressive returns over the next few years.
Consider when Nvidia created this list on April 15, 2005… If you invested $1,000 at the time of recommendation, you would have earned $822,755.!*
Stock Advisor provides investors with an easy-to-understand blueprint for success, including guidance on portfolio construction, regular updates from analysts, and two new stocks each month. of stock advisor For the service more than 4 times The resurgence of the S&P 500 since 2002*.
the story continues
