We came across a bullish thesis on Advanced Micro Devices, Inc. (AMD) on Substack by Felix. In this article, we will summarize the bulls’ thesis on AMD. Advanced Micro Devices, Inc. (AMD)’s share was trading at $95.29 as of April 15th. AMD’s trailing and forward P/E were 95.29 and 20.49 respectively according to Yahoo Finance.
A close up of a complex looking PCB board with several intergrated semiconductor parts.
AMD is rapidly positioning itself as a major player in the semiconductor industry, emerging as a strong competitor alongside larger firms like NVIDIA, particularly within the booming AI-driven sector. While NVIDIA has dominated the AI conversation, AMD has been quietly building a formidable AI strategy, focusing on its MI300X AI accelerators. This innovation, coupled with a robust and diverse product portfolio, has enabled AMD to gain significant traction in the data center market, which is experiencing exponential growth. In fact, the data center segment now accounts for 50% of AMD’s revenue, having experienced a remarkable 94% year-over-year growth in 2024, underscoring the company’s ability to capitalize on the rising demand for cloud computing and AI technologies.
AMD’s business model is anchored in four core segments: data centers, client computing, gaming, and embedded solutions. Each of these areas plays a vital role in the company’s growth, but it is the data center business, driven by AMD’s EPYC processors and MI300X GPUs, that has proven to be the most lucrative. The global expansion of cloud infrastructure has created an essential market for AMD’s chips, which are crucial for powering virtual machines and optimizing cloud services, making the company an integral part of the digital transformation. Meanwhile, the client computing segment, which is driven by AMD’s Ryzen processors, is also growing, though it contributes less than the data center business. However, AMD has faced challenges in its gaming and embedded segments, where it has seen declines of 58% and 33%, respectively, due to market slowdowns and overall contraction in the gaming industry.
Despite these challenges, AMD’s prospects remain highly promising, particularly within the data center market. The growing demand for AI and machine learning applications presents a massive opportunity for the company. AMD’s MI300X GPU is specifically designed for high-performance AI workloads, making it indispensable for cloud service providers such as Amazon Web Services and Microsoft Azure. By offering a cost-effective alternative to NVIDIA’s offerings, AMD is providing businesses with the tools they need to optimize operations while reducing costs, an attractive proposition as the cloud computing market continues to expand.
