Advanced Micro Devices (NASDAQ:AMD) has been navigating a challenging landscape as it competes in the competitive AI market, often overshadowed by industry giant Nvidia. The past year saw AMD perform admirably, yet continue to find itself in Nvidia’s shadow. Coupled with macroeconomic challenges and export restrictions, AMD faced headwinds that made its journey difficult.
However, there are signs of potential change on the horizon. With relations between the U.S. and China showing signs of improvement, AMD has rebounded significantly, enjoying a 44% surge since its low on April 8.
Investor James Foord believes that this resurgence is not merely a temporary rebound but could herald a significant transformation. He predicts that 2025 will be a pivotal year for AMD, where the company might finally establish its presence in the AI space. Foord, who is a top-rated investor, observes that AMD’s upcoming MI350 chip is expected to outperform Nvidia’s H200 in terms of memory and bandwidth. He also points out that AMD’s EPYC processors exhibit greater efficiency compared to Nvidia’s Grace CPU. Although Nvidia currently holds an advantage with its established CUDA software ecosystem, Foord notes that AMD is making substantial enhancements to its ROCm software.
Foord’s optimism also stems from AMD’s recent earnings report, which indicated a notable increase in gross profits by 46% year-over-year, despite a seasonal decline in revenues. This suggests that the company is on an upward trend, with the possibility of double-digit revenue growth anticipated for 2025.
The investment community appears to share Foord’s positive outlook. With 23 analysts rating AMD as a Buy and 9 maintaining a Hold rating, the consensus leans toward optimism. The average 12-month price target for AMD stands at $125.07, implying an 11% upside potential.
In conclusion, AMD is positioned for possible growth, particularly if geopolitical tensions stabilize. As the company updates its technologies and takes steps to strengthen its market position, there remains a hopeful outlook for AMD’s future in the AI sector.