NVDA - AMD: Building An AI Ecosystem

2024-07-12 10:47:13 ET

Summary

• Advanced Micro Devices, Inc. stock has slightly outperformed the market but lags Nvidia stock, potentially due to the market's belief in Nvidia's long run AI dominance.
• AMD is focusing on building a comprehensive AI ecosystem with diverse hardware offerings, acquisitions like Silo AI, and rapid technology development.
• Despite downward revisions in earnings expectations, AMD's growth potential and undervaluation of a PEG ratio suggest significant upside, especially in the AI market.
• I believe the stock is a strong buy.

Investment Thesis

Since I last covered Advanced Micro Devices, Inc. ( AMD ) in April, the stock has barely outstripped the market, increasing by 13.49%, while the S&P 500 (SP500) increased by 10.33%. Looking at their biggest competitor, NVIDIA Corporation (NVDA), this company increased by roughly 50% within the same timeframe.

Despite (what I believe to be is) their 2nd place rating in the AI-chip market, AMD has obviously not been able to keep up with Nvidia's share price. Although they outperformed the market, I believe their stock should have increased at a rate more like their competitor. I suspect this is due to the belief held by some investors that Nvidia has a runaway lead in the AI GPU race. However, there is so much more that deserves to be factored in than just GPUs and CUDA....

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