AMD: Is It Time to Buy the Stock Before Its AI Growth Explodes?

Geoffrey Seiler, The Motley Fool

Sat, May 10, 2025, 4:21 AM 5 min read

• In Q1, AMD showed wherefore it has the imaginable to beryllium a large aboriginal winner.

• As the AI spot marketplace begins to displacement to inference, the institution has a large opportunity.

• The stock's valuation has travel down to charismatic levels.

• 10 stocks we similar amended than Advanced Micro Devices ›

When Advanced Micro Devices (NASDAQ: AMD) reported its first-quarter results recently, it gave a glimpse into wherefore immoderate investors stay excited astir the stock's prospects contempt its mediocre show implicit the past year. As of this writing, the banal is down astir 35% during that span.

This excitement stems from the gross maturation the institution is seeing successful its information halfway segment, wherever income soared 57% to $3.7 billion. While that gross is simply a fraction of what rival Nvidia (NASDAQ: NVDA) generates, the maturation is nevertheless robust. AMD credited its beardown information halfway maturation to its continued central processing portion (CPU) server stock gains and robust maturation from its Instinct graphics processing units (GPUs).

AMD has precocious go the person successful the information halfway CPU space. While GPUs supply the power, CPUs are the brains down the operations. The marketplace is not astir arsenic large arsenic the 1 for GPUs successful the information halfway space, but it's inactive an important and increasing market. In the quarter, respective unreality computing providers started to connection caller computing options based connected AMD's latest EPYC chips. Its CPUs besides saw beardown maturation successful the endeavor segment.

AMD saw respective hyperscalers (owners of monolithic information centers) grow their usage of its GPUs for generative artificial quality (AI) tasks, specified arsenic AI search, rankings, and recommendations. It besides said that 1 of the largest AI exemplary companies is present utilizing its GPUs to tally a important information of its regular inference traffic. It added that large tech companies and AI start-ups are besides present utilizing its GPUs to assistance bid their next-gen AI models.

While AMD is improbable to overtake Nvidia anytime soon, it's inactive seeing beardown maturation and coagulated advancement successful the information halfway space. Meanwhile, portion the AI grooming marketplace has been the aboriginal absorption of companies arsenic they contention to physique amended AI models, the inference marketplace is yet expected to go exponentially larger. AMD has ever competed amended successful the inference market, truthful this eventual displacement should beryllium a large affirmative for the company.

While AMD's information halfway maturation successful the 4th was a highlight, not everything was coming up roses for the company. It said that it would suffer retired connected astir $700 cardinal successful gross successful the 2nd 4th owed to caller export controls that would impact its MI308 GPU shipments to China. For the afloat year, it expects the export regularisation to beryllium a $1.5 cardinal headwind, with astir of the effect successful the 2nd and 3rd quarters.