We recently published a list of The 10 latest AI news, earnings and analyst ratings you shouldn’t miss. With Advanced Micro Devices, Inc (NASDAQ:AMD) ranking 7th on the list, it deserves a closer look.
Stocks of technology companies continue to fall amid fears that the Fed is taking too long to start cutting interest rates. These fears are fueled by recent jobs data showing rising unemployment. However, some analysts believe the recent decline in AI stocks is part of a normal market rotation and provides investors with a buying opportunity. In a recent conversation with CNBC, Michael Landsberg of Landsberg Bennett Private Wealth said the recent decline is obviously a “mini reboot.” The analyst said AI stocks have had a “great run” and the recent decline is a “typical process” of market rotation.
“That doesn’t mean we’re not positive about AI in the long term, but when prices rise so much, you rebalance your portfolios to keep risk under control,” Landsberg said.
When asked if the AI bubble had burst and this was the end of the AI hype, the analyst replied “absolutely not” and described the recent decline as a “slowdown” in growth and a “normalization”.
Landsberg said that the earnings season will “separate the wheat from the chaff” and believes that the big technology companies will continue to drive earnings in the future.
For this article, we combed through the latest AI news, earnings, and analyst ratings and picked the 10 biggest stocks that moved on those developments. For each company, we mentioned the number of hedge fund investors. Why do we care about the stocks hedge funds invest in? The reason is simple: Our research has shown that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (More details can be found here).
Advanced Micro Devices, Inc (NASDAQ:AMD)
Number of hedge fund investors: 124
Advanced Micro Devices, Inc (NASDAQ:AMD) impressed Wall Street with solid second-quarter results on strong data center revenue. Data center revenue increased 49% year over year during the period.
But can Advanced Micro Devices, Inc (NASDAQ:AMD) continue to gain in the coming months? Analysts are confident given the launch of the Instinct™ MI300 series accelerators, designed for AI and HPC workloads. The new chip competes with Nvidia’s H100 AI chip. Advanced Micro Devices, Inc (NASDAQ:AMD) now plans to launch new AI chips annually, including the MI325X in the fourth quarter of this year, the MI350 in 2025, and the MI400 in 2026. Advanced Micro Devices, Inc (NASDAQ:AMD) said the MI350 will be a competitor to Nvidia’s Blackwell.
Advanced Micro Devices, Inc (NASDAQ:AMD)’s data center business doubled its revenue, but that growth didn’t come at the expense of profits. The segment’s operating income grew 405% compared to the same period last year. However, Advanced Micro Devices, Inc (NASDAQ:AMD)’s data center business is still very small compared to NVDA. It generated about $2.8 billion in revenue versus $22.6 billion in quarterly revenue for NVDA. However, Advanced Micro Devices, Inc (NASDAQ:AMD)’s CPU and GPU businesses are also thriving. Ryzen CPU sales grew 49% year-over-year and slightly quarter-over-quarter. Although gaming sales fell 59% due to lower PlayStation and Xbox sales, Advanced Micro Devices, Inc (NASDAQ:AMD)’s Radeon 6000 GPUs saw year-over-year sales increase.
Advanced Micro Devices, Inc (NASDAQ:AMD) is trading 17% below its 3-year average P/E ratio. The company is expected to grow its earnings per share by 43% over the long term, compared to 33% for Nvidia. Third-quarter revenue is expected to grow by 15% compared to the previous quarter. Given growth projections based on new chips and an expected increase in AI spending by other companies, Advanced Micro Devices, Inc (NASDAQ:AMD) stock is undervalued at current levels with a P/E ratio of 38.
Overall, Advanced Micro Devices, Inc (NASDAQ:AMD) ranks 7th on Insider Monkey’s list of the title The 10 latest AI news, earnings and analyst ratings you shouldn’t miss. While we recognize the potential of Advanced Micro Devices, Inc (NASDAQ:AMD), we believe AI stocks promise higher returns and do so in a shorter period of time. If you’re looking for an AI stock that’s more promising than AMD but worth less than five times its earnings, read our report on the cheapest AI stock.
CONTINUE READING: Analyst sees a new $25 billion “opportunity” for NVIDIA And Jim Cramer recommends these stocks.
Disclosure: None. This article was originally published on Insider Monkey.
