There are many takeaways from Ant Group's recent news, but the one critical to Advanced Micro Devices (NASDAQ: AMD) investors is this: Ant Group is leaning more heavily on AMD chips and domestically sourced GPUs to lower the cost of training AI.
They are getting similar, if not better, results than with NVIDIA’s (NASDAQ: NVDA) chips, providing long-awaited evidence that AMD can regain share from NVIDIA.
The opportunity is significant, with NVIDIA’s GPU business growing by triple digits and worth more than 4x AMD’s total 2024 revenue. Taking even 1% of NVIDIA’s business is worth nearly 5% of revenue gain for AMD.
Advanced Micro Devices Gains Traction in GPU and CPU Markets
Critical highlights from AMD’s Q4 release are that it is gaining ground in some GPU and CPU markets. The company’s data center business grew by nearly 70%, surpassing Intel (NASDAQ: INTC), while the PC-oriented Client segment also grew robustly. The reason is that AMD products offer superior performance in certain use cases, including large data centers and laptop applications. The critical area where it lags is with its software infrastructure, but the company is working hard to catch up with NVIDIA. Updates in late 2024 doubled MI300X inference and training performance, and more are coming.
Advanced Micro Devices' consensus growth outlook fails to factor in the potential for market share gains. The analysts' consensus forecasts growth to remain solid but also that it is peaking and expected to slow as fiscal 2025 progresses and again in 2026.
The more likely scenario is that sustained data center demand strength, improved market share and normalization in the Embedded and Gaming markets will lead to outperformance and a positive analyst revision cycle, if not acceleration. As it is, more analysts are lowering their estimates than raising them ahead of the Q1 2025 release, setting the bar low and increasing the odds that actual results will outperform the consensus.
AMD Insider Buys Shares: Analysts and Institutions Are Buying in 2025
AMD insider Philip Guido bought shares in early February. The purchase is conspicuous as the only insider transaction tracked by MarketBeat in 2023 through late March and the only purchase in several years. Since 2012, in fact. The buy is worth nearly $500,000, bringing his holding to over 33,000 shares.
[content-module:Forecast|NASDAQ: AMD]Guido is an executive vice president with the company and has been its CCO, or Chief Commercial Officer, since mid-2023. He comes from IBM and is instrumental in advancing AMD’s relationship with it. He is responsible for strategic account penetration of AMD’s largest enterprise-level clients and is in a position to know when good news is brewing.
Analysts and institutional trends are equally bullish. Institutions have bought on balance for three consecutive quarters, with total activity, bullish and bearish volume, ramping to a two-year high in Q1.
The critical detail is that buying volume outpaced selling by $2 billion or more than 1% of the market cap, providing a solid support base for the market. Their buying helped confirm a technical support base in the mid-$90s and set the market up for a significant rebound, which analysts' sentiment will aid.
Many analysts reset their stock price targets lower following the Q4 release. However, the new targets, including the downward revisions, suggest a minimum double-digit upside for the stock price, and the average aligns with the broader consensus. Consensus forecasts suggest a 40% upside from the critical support level likely to be reached this year.
AMD Is Deeply Undervalued Relative to Its Growth Outlook
Not only is AMD’s revenue and earnings growth outlook underestimating its potential, but the stock price is also deeply undervalued relative to it. The stock trades at 24x this year’s forecast, while other leading AI names trade at much higher multiples and under 10x its 2030 targets.
Assuming the market continues to value AMD stock with a slight premium to the S&P 500 through 2030, it could more than double in price by then.
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