Advanced Micro Devices (NASDAQ:AMD) has dramatically changed the landscape of the CPU industry, which was once dominated by Intel. By offering superior products and capitalizing on various Intel missteps, AMD has managed to significantly close the gap on its once much stronger rival.
Now faced with Nvidia (NASDAQ:NVDA) , the overwhelming leader in the data center world, can AMD pull off its tricks again and hold the chip king in check?
For investor Blue Sea Research, AMD should be seen as the company most likely to do so.
“AMD is the second-best choice for AI chips, and its market share is likely to increase in the coming quarters as new iterations close the gap with market leader Nvidia,” the investor said.
Nvidia holds the leading market position by accounting for the majority of AI chip sales and virtually dominating the market. However, AMD’s growth trajectory is less dramatic, but it is also on the rise. Looking ahead, Bluesea emphasizes that the “most important metric” for AMD will be the growth trajectory of its data center business. AMD has increased its 2024 data center GPU sales forecast by 11% to $4 billion to $4.5 billion, after increasing it to $3.5 billion to $4 billion earlier this year, suggesting a clear upward trend is emerging.
It’s worth mentioning again here that AMD could take advantage of Intel’s failure and, given the recent delays of Nvidia’s Blackwell architecture, AMD could “gain customers in this important segment.”
Moreover, given the significant progress Nvidia has made to date, Bluesea argues that the company has “limited room to expand its market share.” Meanwhile, AMD’s market share is still fairly small, but because it partners with many of the large cloud hyperscalers, a “second-best move” could give it better long-term returns than the market leader.
“AMD’s growing market share in AI chips could drive strong bullish sentiment towards the company’s stock,” Brucie wrote in his summary. “This should help the stock outperform Nvidia and other rivals.”
Not surprisingly, Bluesea rates AMD a “Strong Buy” (to watch Bluesea’s track record, click here).
That’s also the consensus conclusion among analysts, based on a combination of 28 Buys and 6 Holds. The average target is currently $190.90, suggesting an upside of 28.5% over the next year. (See AMD stock price forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investors. The content is for informational purposes only. It is extremely important that you always conduct your own analysis before making any investment.
