AMD Stock Will Soar Over the Next 8 Years. Here’s 1 Reason Why.
Advanced Micro Devices (NASDAQ: AMD) shares have sold off in recent weeks. Weak PC sales and worry about competition artificial intelligence The (AI) accelerator market seems to have weighed on stocks.
On the surface, you can see why AMD has struggled: Its $18 billion in revenue grew 10 percent in the first nine months of 2024, well below the triple-digit revenue growth of its main rival. Nvidia:. Furthermore, in the first three quarters of 2024, revenue from AMD’s gaming and embedded segments fell 58% and 38%, respectively.
However, the secular trend in the chip market should stop falling and the stock will rise over the next few years.
Despite competitive concerns, investors shouldn’t write off the AI ​​accelerator business and its potential to fundamentally change AMD’s predictions from Allied Market Research compound annual growth rate 38% for the AI ​​chip market by 2032, indicating a high probability of massive growth during those eight years.
In the absence of Nvidia accelerators, customers love Microsoft and: Meta platforms Therefore, data center revenue (which includes AI accelerators) increased by 107% in the first nine months of 2023.
More importantly, the data center segment accounted for 48% of AMD’s revenue this year.As of now, Nvidia’s data center segment accounts for 87% of revenue for the first nine months of fiscal 2025 (ended October 27). : Over time, the data center segment is poised to generate more revenue for AMD, possibly even matching Nvidia’s 87% share.
Indeed, a recovery in other sectors could also reduce the percentage of revenue coming from the data center segment, however, improving growth likely means AMD stocks will thrive over the next eight years.
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