Would you buy AMD stock now?

Semiconductor designer Advanced micro devices (NASDAQ:AMD) He’s been fainting lately. Although Strong jump in prices Last Monday, AMD stock fell more than 40% from its one-year high. With less than a week left in 2024, stock prices are down 15% this year. At the same time, Standard & Poor’s 500 (SNPINDEX: ^GSPC) The stock market index is up 25% year to date.

Is AMD missing out on The artificial intelligence (AI) market is booming.Or is the stock a great investment in AI at these low prices? On further review, the third option seems more correct – AMD is a “contract” in my book.

Arch-rival Nvidia (Nasdaq: NVDA) AMD sets the standard for AI accelerator chips and how they are used in actual computing systems, but AMD is the main contender for that company’s dominant position.

In October’s third-quarter report, AMD’s data center sales rose 122% year-over-year to $3.5 billion. The Instinct series of AI accelerators and the EPYC line of server-level processors have led this increase, and both products play important roles in training and running large language models (LLMs).

AMD’s data center sales certainly can’t match Nvidia’s $30.8 billion in sales in the same quarter. This isn’t the end of the world, though.

AMD is embracing its underdog role. The company is not trying to set new standards for artificial intelligence. Instead, it makes sure its products work with the same AI software and programming techniques as Nvidia’s chips. Simplifying switching from one hardware solution to another makes it easier to attract existing Nvidia users to AMD alternatives.

“Pretty much any model written for the standard framework, if you’re running on NVIDIA, you can run it on the (AMD Instinct) MI300 out of the box, on day one, and it will work,” AMD’s Forrest Norrod said at a recent press conference. Industry conference.

This strategy is paying off. AMD’s data center growth surpassed Nvidia’s 112% year-over-year increase in the third quarter. In other words, AMD is gaining some ground on larger AI chips.

AMD is an important provider of AI hardware. However, it’s not just wine and roses. The AI ​​bandwagon may have gone a little too high, too quickly, and investors are taking a more critical look at this boom from a long-term perspective.

As a result, many stocks in the AI ​​space have stalled or even declined recently. Nvidia shares rose a scant 0.1% last month, and partner OpenAI Microsoft It rose by only 0.6% in the same period. Pioneers in building artificial intelligence systems Super micro computer and Dale They decreased by 7.1% and 17.2%, respectively.

The story continues