Is AMD Inventory a Purchase?

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AMD (NASDAQ: AMD) was as soon as thought of a struggling underdog chipmaker that trailed behind Intel and Nvidia within the x86 CPU (central processing unit) and discrete graphics processing unit (GPU) markets, respectively. However over the previous ten years, its inventory soared about 5,110% because it gained floor in opposition to Intel and saved tempo with Nvidia.

That rally would have turned a $20,000 funding into greater than $1 million. However over the previous 12 months, its inventory stayed almost flat because the sluggish progress of the PC market offset the growth of its higher-growth information heart enterprise. Does that breather symbolize a golden shopping for alternative for long-term buyers?

Picture supply: Getty Pictures.

Lisa Su, who took over as AMD’s CEO in 2014, turned across the chipmaker with three major methods. First, AMD rolled out extra {custom} accelerated processing models (APUs) which merged collectively CPUs and GPUs on a single die. It bought numerous these chips to gaming console makers like Sony and Microsoft, and that progress fed the growth of its enterprise, embedded, and semi-custom (EESC) enterprise whereas producing additional cash for its core CPU and GPU companies.

Second, Su drove AMD to revamp its CPUs to handle the disappointing efficiency of its earlier technology of Bulldozer chips. Not like Intel, which nonetheless manufactured most of its chips at its personal first-party foundries, AMD outsourced the manufacturing of its most superior chips to TSMC. That “fabless” technique enabled AMD to tug forward of Intel, which struggled with manufacturing points and delays, within the “course of race” to fabricate smaller, denser, and extra power-efficient chips.

Lastly, AMD expanded into the info heart market with its EPYC CPUs, Intuition GPUs, and programmable chips by way of its acquisition of Xilinx in 2022. These strikes helped AMD crack Intel’s close to monopoly within the information heart market. All of these catalysts boosted AMD’s income at a compound annual progress charge (CAGR) of 17% from 2014 to 2023.

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Based on PassMark Software program, AMD’s share of the x86 CPU market grew from 23.4% to 36.4% between the fourth quarters of 2014 and 2024. Intel’s share shrank from 76.6% to 61.5% throughout the identical interval.

AMD’s income declined within the first half of 2023 because the PC market cooled off. That slowdown occurred after it lapped the business’s pandemic-driven progress spurt and handled more durable macroheadwinds within the shopper and enterprise markets. Sony and Microsoft additionally bought fewer models of their growing older gaming consoles.

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