Better Semiconductor Stock: AMD vs. Broadcom

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Last year was a solid year for semiconductor companies, as evidenced by the 21% growth reported PHLX semiconductor sector index during this period.But not all semiconductor stocks have benefited from the broader market’s rise.

For example, before shares Broadcom: (NASDAQ: AVGO) have grown by an impressive 115% in the last year, Advanced Micro Devices (NASDAQ: AMD) shares moved in the opposite direction and lost 14% of their value. Both companies play a key role in the semiconductor market as they design chips used in personal computers (PCs), smartphones, game consoles and data centers.

Let’s take a closer look at the prospects of these two semiconductor stocks and decide which is the better buy after their contrasting performances last year.

While 2024 was a bad year for AMD, the company could see a good turnaround in 2025 thanks to a sunny outlook for the PC and data center markets. A closer look at AMD’s Q3 2024 results (released in October 2024) tells us , that the turnaround is already underway.

The chipmaker’s quarterly revenue rose 18% year-over-year to $6.8 billion, and earnings per share rose 31% to $0.92 per share is a 22% increase in its revenue to $7.5 billion.Analysts predict that the company’s profit will increase by 41% to $1.09 per share.

The forecast for 2025 is even rosier. AMD’s bottom line is forecast to rise 54% to $5.13 a share in the new year on a 27% rise in revenue to $32.5 billion.It’s easy to see why analysts expect AMD will go on gas in 2025. The company’s data center business gained momentum in 2024 as AMD was able to attract more customers. for its graphics processors (GPUs) used in servers. artificial intelligence (AI) model training and inference.

AMD originally expected to sell $2 billion worth of data center GPUs in 2024, but has increased that forecast to more than $5 billion.The company could see further growth in this segment in 2025 thanks to an improved supply chain that should allow AMD to drive greater demand for its AI GPUs. Meanwhile, CEO Lisa Su notes that PC OEMs (original equipment manufacturers) are set to triple the number of products powered by AI-enabled Ryzen PC processors by 2025.

As a result, it wouldn’t be surprising to see AMD gain more share of the client processor market. Mercury Research reports that AMD’s share of the client processor market grew by 4.6 percentage points year over year to 23 in the third quarter of 2024. .9%. AMD’s strong position in AI PCs should allow it to capture more of this space in 2025, which should be good enough to help the company maintain its outstanding growth in this sector.

 
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