Stock prices of Advanced micro devices (NASDAQ: AMD) have increased by 454% in the past five years. A $10,000 investment in AMD in June 2019 would be worth $55,410 today. That’s a lot of growth in a relatively short time. Can AMD continue to grow at this pace over the next five years?
This leading semiconductor continues to gain market share Intel in the central processing unit (CPU) market, but is also targeting other artificial intelligence (AI) opportunities that could lead to another big run for shareholders over the next five years.
Why Buy AMD Stock?
At this point in 2019, AMD was acting contrary to the growth strategy it outlined to investors at Financial Analyst Day in May 2017. AMD was targeting a higher gross margin as it shifted more sales to high-end chips, such as graphics processing units (GPUs). ), which generated higher margins. There was also talk of pursuing the CPU server market that was dominated by Intel.
By 2019, AMD’s margins, revenue and profits were on an upward trajectory, and more growth should occur.
However, AMD’s revenue grew just 2% year-over-year in the first quarter, pressured by weak demand for gaming GPUs and weak sales in other markets. These segments could see a recovery in the coming year.
AMD shares are currently trading about 32% below their previous peak, and it could be a good time to buy shares. The opportunity in the data center market looks huge, as revenue rose 80% year over year in the first quarter.
AI opens up more markets to sell chips, which helps fuel the growth of AMD’s data centers. AI at the edge, where processing takes place on devices and local servers closer to the user, is a big opportunity that could drive demand for chips on more devices.
Growth expectations are rising, making the recent pullback a great opportunity to buy shares.
Should you invest €1,000 in advanced micro-devices now?
Consider the following before buying shares in Advanced Micro Devices:
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John Ballard holds positions in Advanced Micro Devices. The Motley Fool holds positions in and recommends Advanced Micro Devices. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls to Intel and short August 2024 $35 calls to Intel. The Motley Fool has a disclosure policy.
If you had invested $10,000 in high-end microdevice stocks five years ago, here’s how much you’d have today. originally published by The Motley Fool
