Advanced Micro Devices (AMD) reported earnings recently, which despite appearing disappointing, have a silver lining for investors. The stock has dropped 16% since its quarterly report last week, but this may be an opportunity to buy.
Investors have been less enthusiastic about AMD than its rival Nvidia, with the latter’s value skyrocketing by over 170%. However, if you’re investing in AMD long-term, it could provide significant returns. Its price-to-earnings ratio is around 28, lower than Nvidia’s 35, making it a relatively cheap option.
The upcoming release of AMD’s MI325X chip may also boost investor sentiment. Although the company hasn’t started shipping it in large quantities yet, it has the potential to offer customers an alternative to Nvidia’s Blackwell chips. The lack of excitement around AMD’s stock could be due to market pricing this opportunity too low.
However, with businesses looking for alternatives to Nvidia, which is facing a backlog and supply issues, AMD’s AI-powered chip could become more attractive. CEO Lisa Su notes that AI demand has exceeded expectations and continues to grow rapidly.
Given the surging demand for AI chips, investors should consider AMD as an underrated buy. At a lower valuation than Nvidia, AMD offers a favorable opportunity to invest in this growing market. Even if you prefer Nvidia, holding both stocks may be a wise decision for long-term growth.
Source: https://www.fool.com/investing/2024/11/08/amd-stock-falls-after-earnings-3-reasons-to-buy