Advanced Micro Devices(NASDAQ: AMD) and: Marvell Technology(NASDAQ: MRVL ) The stock market has enjoyed contrasting fortunes in 2024, with one posting stellar gains while the other is in the red.
More specifically, AMD’s 13% decline this year pales in comparison to Marvell’s impressive 76% gain in stock. Both companies are benefiting from growing demand for artificial intelligence (AI)-powered chips AI stock from two in 2025? Or can AMD turn its fortunes around in the new year and overtake Marvell?
Let’s find out.
AMD plays second fiddle to: Nvidia: AI in the data center graphics processing unit (GPU) market Despite this, the company’s data center business is growing at an impressive pace.
For example, in the third quarter of 2024, AMD data center revenue grew 122% year-over-year to a record $3.5 billion.
Management says this impressive growth is driven by strong demand for its data center GPUs and CPUs (central processing units). The company now expects to end the year with $5 billion in data center GPU revenue, a huge improvement over 2023. of the $400 million in revenue from sales of these chips in the fourth quarter.
Furthermore, the company continued to increase data center GPU guidance throughout the year, starting at $2 billion at the start of the year.
AMD is also seeing success in other related areas, such as AI-enabled personal computers (PCs), which explains why the company’s revenue from its customer segment, which includes sales of processors used in desktops and laptops, fell in the third quarter. up an impressive 29% year-over-year to $1.9 billion Together, these two segments accounted for 80% of AMD’s top line in the third quarter, and their solid growth was weak allowed the company to offset weakness in other areas such as gaming and embedded chips.
The company’s total revenue rose 18% to $6.8 billion, and adjusted earnings rose 31% to $0.92 per share.The company’s guidance for the current quarter is also solid is that its annual growth will increase to 22% in the fourth quarter. Analysts predict that AMD will exit 2024 with revenue growth of 13% $25.6 billion, as well as a 25 percent increase in earnings to $3.32 per share.
Next year, however, will be much stronger for the AMD, with consensus expectations for its revenue to grow by nearly 27%, while revenue is forecast at 54%.
It’s easy to see why analysts expect a significant acceleration in AMD growth next year. Gartner. That would be a major improvement over the 100% growth expected in 2024.
AMD is well-positioned to capitalize on this market growth, according to its third-quarter earnings call, which said PC makers such as HP and Lenovo are “on track to more than triple the number of Ryzen AI Pro platforms, which they offer in 2024. and we expect to have more than 100 Ryzen AI Pro commercial platforms [the] market next year.”
Meanwhile, AMD could also benefit from an improvement in the release of AI GPUs by its foundry partner. TSMC: The Taiwan-based foundry giant is expected to double in size in 2025, and it’s also expected to use its Arizona fab to make AMD’s upcoming AI accelerators, so there’s a good chance the company’s stock market fortunes could turn around in 2025 thanks to of AI.
Marvell Technology is a key player in the AI-focused application integrated circuit (ASIC) market, an area that is growing at breakneck speed. These catalysts are the reason why the data center business has been growing incredibly recently.
The chipmaker’s data center revenue grew 98% year-over-year to $1.1 billion in the third quarter of fiscal 2025 (which ended Nov. 2). Notably, the data center segment accounted for Marvell’s revenue 73% last quarter, compared to just 39% last year.The company’s data center growth was good enough for Marvell’s total revenue year over year to increase 7% despite sharp double-digit declines in its four other segments.
Management says demand for its AI-specific chips is on track to exceed its full-year AI revenue of $1.5 billion by a significant margin.Marvell forecasts $2.5 billion in the coming fiscal year.
However, there is a good chance that the chipmaker could bring higher AI revenues next year as well, as it expands its partnerships with major cloud computing providers such as: Amazon: and brought an additional customer on board.
These catalysts are expected to be so strong that analysts are predicting a 41% jump to the top line next year to $8.1 billion, as well as 77% growth to $2.76 per share the company’s revenue for the current fiscal year will increase just 4% to $1.56 per share, along with a 3% increase in earnings per share.
So there’s a good chance Marvell shares will continue their hot rally well into 2025.
We saw that both AMD and Marvell are expected to grow impressively next year. Marvell is expected to grow at a faster rate than AMD, but there are several reasons why the latter may be more. to be a good AI choice.
First, AMD is cheaper. The stock’s sales and forward earnings multiples make it a cheaper stock at the moment compared to Marvell.
Second, AMD is a more diversified AI stock. The company supplies CPUs and CPUs not only for data centers but also for PCs, indicating that it may have a larger addressable AI market than Marvell. :
So investors looking for an AI stock that can deliver a mix of both value and growth may be tempted to buy a dime from Marvell despite its poor early stock market performance this year.
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John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of The Motley Fool’s board of directors. Strictly Chauhan has no positions in any of the stocks listed. The Motley Fool has positions in Advanced Micro Devices, Amazon, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends The Spotted Fool has a disclosure policy.
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