2024-02-08 12:31:25 ET
Summary
- Advanced Micro Devices, Inc. stock has rallied based on the expected growth of its AI business. As this is now priced into the stock, further gains will likely require years of additional execution.
- Q4 results show strong growth in the data center segment, positioning AMD as a strong competitor to Nvidia, having overtaken Intel for now as main contender.
- The valuation of AMD is similar to ASML Holding, but AMD's growth going forward seems mainly reliant on its data center AI business, which poses risks.
- While Nvidia's results show there are reasons to be bullish on AI, the valuation, which provides an unfavorable risk-reward, makes the stock a hold at best.
- In Nvidia's case, the stock price has followed actual performance and near-term expectations, whereas for AMD the stock is likely years ahead of actual performance.
Investment Thesis: AI Micro Devices
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For further details see:
AMD: AI Propels Growth, For A High Price