1 Semiconductor Stock That Could Be a Surprise AI Winner
The chipmaker is building next-generation products to support AI models right out of the box.
Elsewhere in AMD's business, its gaming and PC chips are also seeing strong demand.
10 stocks we like better than Advanced Micro Devices ›
Advanced Micro Devices (NASDAQ: AMD) is gradually evolving from mostly a traditional chip company to a prominent artificial intelligence (AI) infrastructure player. While Wall Street has been mostly focusing on Nvidia, AMD has quietly established itself as a strong player in the AI data center business. The company provides high-performance computing hardware and software solutions to clients for processing cloud and AI workloads.
In the first quarter of 2025, data center revenue grew 57% year over year to $3.67 billion, making up almost half of AMD's total revenue. Data center AI business revenue also increased by a double-digit percentage year over year, driven by increased shipments of the MI325X accelerators for new cloud and enterprise workloads.
With AI inferencing costs escalating rapidly, AMD is in a better position to capture a bigger share of the AI market. Its Instinct GPUs are known to offer superior price performance than competitors. Here are some more reasons why the company may prove to be a surprise AI winner in 2025.
AMD's data center business is experiencing robust momentum, driven by solid demand for its EPYC server processors and Instinct AI accelerators. AMD accounted for 25.1% share of the server CPU market, up 2 percentage points year over year, as EPYC server processors continue to be in high demand from both cloud players and enterprise customers. All major cloud players are engaging with the company in the development of fifth-generation EPYC CPUs, codenamed "Turin."
EPYC processors are also in high demand from enterprise customers across a range of industries and functions. The company expects enterprise adoption of EPYC processors to further accelerate, as more than 150 server platforms using these chips will become broadly available in the coming quarters.
The company's data center AI business is also gaining traction. Multiple Tier 1 cloud and enterprise customers have opted for AMD's Instinct AI accelerators in the first quarter. These clients include one of the largest frontier model developers, which has deployed Instinct GPUs to cater to a significant portion of its daily AI inferencing workloads.
AMD has also started sampling the next-generation MI350 series GPUs with several customers and is on track for production by mid-2025. With MI350 offering higher performance, memory capacity, bandwidth, support for new data types, and network efficiency as compared to the MI300 series, AMD expects strong deployment for these chips in the second half of 2025. Furthermore, the company is gearing up for the launch of MI400 series GPUs in 2026.
AMD is also focusing on strengthening its software ecosystem, mainly its ROCm software stack for programming the company's GPUs. Instead of releasing quarterly ROCm updates, the company is now delivering them on a biweekly basis.
The company has also increased access to its Instinct compute infrastructure for open-source developers to build, test, and deploy updates to the ROCm stack on a nightly basis. Subsequently, 2 million models on the open-source Hugging Face platform are running directly on AMD hardware without needing any special customization. The company is also ensuring that newly released AI models can run without hiccups on Instinct accelerators immediately after launch.
Finally, the recent acquisition of ZT Systems is enabling AMD to sell fully integrated AI systems, instead of just hardware components. All these AI initiatives can dramatically expand AMD's data center business in the coming years.
AMD's client segment also reported a strong 68% year-over-year revenue jump to $2.3 billion in the first quarter. The company experienced record client CPU average selling prices (ASPs), driven by increased demand for its high-end desktop and Ryzen processors in gaming and commercial segments.
While AMD's processors are increasingly adopted in gaming desktops, the company is also seeing rising demand in the mobile computing market. Furthermore, sales of the company's latest-generation AI-capable processors also grew more than 50% quarter over quarter in the first quarter.
AMD is also making its presence felt in the commercial PC space, with the company closing deals with large enterprises across several industries.
Despite the solid tailwinds, AMD's shares are currently trading at 21.7 times forward earnings, significantly lower than Nvidia's forward P/E multiple of 25.4.
While investors should not ignore the short-term revenue headwind arising from the export control restrictions for Instinct MI308 shipments to China, the fundamentals of the company are still strong. Hence, with a diversified product portfolio spanning various segments such as data center, gaming, and client; a robust balance sheet with $7.3 billion in cash; and a reasonable valuation position, AMD appears an attractive pick now.
Before you buy stock in Advanced Micro Devices, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Advanced Micro Devices wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $620,719!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $829,511!*
Now, it's worth noting Stock Advisor's total average return is 959% — a market-crushing outperformance compared to 170% for the S&P 500. Don't miss out on the latest top 10 list, available when you join .
See the 10 stocks »
*Stock Advisor returns as of May 12, 2025
Manali Pradhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool has a disclosure policy.
1 Semiconductor Stock That Could Be a Surprise AI Winner was originally published by The Motley Fool
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
an hour ago
- Yahoo
Maingear's Retro95 PC blends '90s workstation nostalgia with modern horsepower
Maingear's latest, the (appropriately named) Retro95, is a deceptive love letter to old-school "pizza box" PCs. It's Wolfenstein 3D and Sierra adventure games on the outside; Cyberpunk 2077 in ray-traced 4K on the inside. That's because you can fit this sucker with up to NVIDIA GeForce RTX 5080 graphics. It supports Intel and AMD processors, up to the Ryzen 7 9800X3D. You can also customize it with up to 96GB of DDR5 memory, 8TB of Gen4 NVMe storage, Noctua fans and an 850W PSU. It's a ray-traced wolf in pixelated sheep's clothing. It looks like the Retro95's case is sourced from the Silverstone FLP01. (That makes sense since Maingear is a custom PC builder.) The case is an ode to beige horizontal PC cases, designed to serve as a pedestal for CRT monitors. They were the default from the early 1980s to mid-1990s. (If you prefer the tower design that succeeded it, Silverstone's follow-up to the FLP01 should scratch that itch.) The Retro95 includes a hidden front-panel I/O array and modern airflow design. And if its exterior has you nostalgic for games you played on similar-looking PCs, you can add a DVD drive. (Who's up for Carmen Sandiego?) "This one is for the gamers who lugged CRTs to LAN parties, swapped out disks between levels and got their gaming news from magazines," Maingear CEO Wallace Santos wrote in a press release. "The Retro95 drop is our way of honoring the classic era of gaming, with a system that looks like the one you had as a kid but runs like the monster you'd spec from Maingear today." Unfortunately, the Retro95 is a limited-edition run. Maingear says once it sells out, that's game over. Given its high-powered hardware and special edition status, it's no surprise that this PC ain't cheap. It starts at $1,599. You can order one exclusively from Maingear's website on July 23.
Bloomberg
2 hours ago
- Bloomberg
AMD CEO Sees Chips From TSMC's US Plant Costing 5%-20% More
Advanced Micro Devices Inc. Chief Executive Officer Lisa Su said that the chips her company gets from supplier Taiwan Semiconductor Manufacturing Co. cost more when they're produced in TSMC's Arizona facilities. Compared with similar parts from factories in Taiwan, the US chips will cost between 5% and 20% more, she said at an AI event in Washington Wednesday. AMD expects its first chips from TSMC's Arizona facilities by the end of the year, Su said.
Tom's Guide
3 hours ago
- Tom's Guide
Windows 11 gets new AI-powered features in latest update — here's 4 tools to try out now
Microsoft is doubling down on its AI efforts on Copilot+ PCs with its latest Windows 11 update, bringing a host of new AI features — and they're ready to try right now. The new Windows 11 update is rolling out now, and it includes a new AI agent in Windows Settings that allows users to find and change settings by describing what they need, a Relight feature in the Photos app to adjust lighting with just a click, more tools in Click To Do and a perfect screenshot feature in the Snipping Tool. There's also Copilot Vision that's now available in the U.S., featuring the Highlights tool that lets Microsoft's AI provide contextual help on specific tasks, showing you how to carry out activities within an app or browser. This will be available in the Copilot app by clicking the glasses icon. Not all Copilot+ PCs are getting these updates straightaway: Snapdragon-powered Copilot+ PCs get these AI features first, with support on Intel and AMD devices coming down the line. Other features are set to arrive soon, including Microsoft's Copilot Vision AI being able to see your whole desktop. But for now, update your Windows 11 PC and find out what the latest Windows 11 update brings to Copilot+ PCs. Thanks to a new AI agent, you can now change settings in Windows 11 on the fly by asking what you want adjusted instead of scrolling through the Settings app. Using Windows' first agent for Copilot+ PCs, you can describe what you want to change in settings in the search box in the Settings app. This works on a range of customizable settings, including displays, connectivity and accessbility. Get instant access to breaking news, the hottest reviews, great deals and helpful tips. For example, you can ask "change my resolution to 1920x1080" for your display, or "connect Bluetooth device" to find and connect headphones or a speaker to your PC — now all in Settings. The agent will offer recommendations and even actions to change the settings of your choice with a simple click, and there's also the option to undo any setting that's changed using the agent. To try this out yourself, follow these directions: And that's it. If the agent isn't able to understand or change the described settings, a Windows search option will pop up instead with the relevant info. Right now, this is only available on Snapdragon X Series-powered Copilot+ PCs, but Intel and AMD PCs will get this feature soon. Microsoft is also adding a new Relight feature that works in the Photos app, which aims to add professional lighting controls to snaps. It makes adjusting lighting in any photo easier, which will be helpful to anyone looking to spruce up their pictures. Relight lets you place up to 3 virtual light sources in photos, which can be placed anywhere. You can adjust the light's intensity, color and position using sliders, too, or select presets such as "Studio Portrait" and "Cinematic Glow." You can do all this by doing the following: Similar to the agent in Settings, this is only available in PCs with Snapdragon X Series CPUs for now, with Intel and AMD-equipped Copilot+ PCs getting it later. Windows 11's Click to Do on Copilot+ PCs is already available, but there are now new actions to help you get through everyday tasks aside from analyzing text and offering contextual actions. Here's a look at the features you can try out now, which can all be done by pressing Windows key + mouse click, Windows key + Q or using the Snipping Tool and selecting text. These new features on Click to Do are currently available for Windows 11 users in English, except for those in Europe. Windows 11's Snipping Tool is also getting an upgrade, this time adding two features. This includes perfect screenshot and color picker. Both options are now available as part of the latest update, with buttons added to the Snipping Tool toolbar. Perfect screenshot will automatically crop and resize what's captured on screen based on the content shown (for example, focusing on an app rather than the entire screen), while color picker can capture the color code of what's inspected. You can do each by bringing up the Snipping Tool or capturing a screenshot using the Print Screen shortcut (Windows Key + Print Screen or Windows key + Fn + Print Screen). Remember, many of these features are only available on Snapdragon X Series Copilot+ PCs right now (which are among the best laptops), with other Intel and AMD PCs getting the features soon, according to Microsoft. Once you've got the latest Windows 11 update, check them out! And be sure to try out these 15 top Windows 11 tips everyone needs to know. Follow Tom's Guide on Google News to get our up-to-date news, how-tos, and reviews in your feeds. Make sure to click the Follow button.
