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AMD Stock Buy Alert: Profit from the AI ​​Boom with Advanced Micro Devices

AMD Stock Buy Alert: Profit from the AI ​​Boom with Advanced Micro Devices

AMD Stock – Buy Alert for AMD Stock: Profit from the AI ​​Boom with Advanced Micro Devices

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modern micro devices (NASDAQ:AMD) shares represent a top-notch microchip and semiconductor company and one of the best ways to profit from the current artificial intelligence boom. AMD stock is up 53% over the past 12 months and has gained 526% in five years.

With the exception of arch-rival NVIDIA (NASDAQ:NVDA), AMD has been one of the best performing chip stocks for investors. AMD stock has fallen 27% since March 8. Investors are wise to use the decline as a buying opportunity.

Growing AI chip sales

The main reason for the decline in AMD stock price is that the company’s financial results, although better than expected, still fell short of Wall Street estimates.

For the first quarter of this year, AMD reported earnings per share of 62 cents, just above the 61 cents Wall Street expected. Revenue was $5.47 billion, also just above estimates of $5.46 billion. Revenue increased 2% year over year.

While the financial results were not a huge success, they did contain some important numbers that indicate that the company has a strong growth engine running at full speed.

Most notably, the company forecast $4 billion in revenue for AI microchips this year. That’s double the company’s $2 billion estimate last fall and the second time in six months that AMD has revised its AI chip revenue forecast upward, showing rising demand.

In addition, AMD management said revenue in the Data Center business unit increased 80% year-over-year to $2.3 billion, driven by strong sales of the company’s latest MI300 series AI chips.

The company said it has sold over $1 billion worth of the new AI chips since their launch last December.

AMD’s overall first-quarter results would have been even better if it hadn’t seen a 48% decline in revenue from the company’s video game chip segment, which reported revenue of $922 million for the quarter.

Partnerships and market shares

Another key to AMD’s success and future growth potential is the company’s strategic partnerships with other companies.

Recently, Microsoft (NASDAQ:MSFT) announced plans to offer its cloud computing customers AI chips from AMD instead of chips from Nvidia.

Microsoft will begin selling AMD’s flagship MI300X AI chips through its Azure cloud computing portal.

The partnership with Microsoft is seen as a viable solution as Nvidia’s H100 graphics processors, used for AI applications, are becoming increasingly hard to obtain due to extremely high global demand.

Partnerships like the one with Microsoft are allowing AMD to gain market share in the AI ​​chip market and break Nvidia’s lead. While AMD still has a long way to go to seriously break Nvidia’s 75 percent market share in the AI ​​chip market, the company is succeeding in taking market share from its rival. Intel (NASDAQ:INTC).

AMD’s sales of AI chips for data center use increased 62.5% between 2021 and 2023, while Intel’s sales of AI data center chips fell 30% over the same period.

The MI300X series AI chips are expected to help further increase AMD’s market share as they offer faster processing speeds and more memory than the company’s previous products.

Buy AMD shares

Advanced Micro Devices has been a great investment over the years, with the company’s stock up 3,900% over the past decade.

Now the company is about to experience a huge growth spurt with its latest AI microchips. They are already selling well and are expected to generate sales of four billion dollars this year.

Strategic partnerships with companies like Microsoft and a growing market share in the AI ​​chip market are helping AMD achieve continued success, making AMD stock a buy.

As of the date of publication, Joel Baglole held long positions in NVDA and MSFT. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s disclosure policies.

Joel Baglole has been a business journalist for 20 years. He was a staff reporter at The Wall Street Journal for five years and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.