/Advanced%20Micro%20Devices%20Inc_%20logo%20and%20chart%20data-by%20Poetra_%20RH%20via%20Shutterstock.jpg)
Advanced Micro Devices, Inc. (AMD) is a prominent player in the semiconductor industry, boasting a market cap of $268.6 billion. Headquartered in Santa Clara, California, the company offers a broad portfolio of high-performance and adaptive processor technologies, including CPUs, GPUs, FPGAs, and Adaptive SoCs. AMD's products are powered by deep software expertise, enabling cutting-edge computing platforms for cloud, edge, and end devices. It uses low pricing strategies to compete with its rivals like NVIDIA Corporation (NVDA).
Companies worth $200 billion or more are generally described as “mega-cap stocks,” and Advanced Micro Devices fits right into that category. Its market cap exceeds this threshold, reflecting its substantial size, stability, and influence in the semiconductor sector. The company, known for its innovative products and technological advancements, plays a leading role in the artificial intelligence (AI) revolution.
Despite its strengths, Advanced Micro Devices is currently sailing through choppy waters. The stock is down 26.3% from its 52-week high of $227.30, achieved in early August last year. Moreover, shares of AMD are down 20.8% over the past three months, underperforming the broader SPDR NYSE Technology ETF’s (XNTK) 3.5% gains over the same time frame.
Over the long term, AMD is up 13.2% on a YTD basis, and the stock has soared 34.3% over the past 52 weeks. By contrast, XNTK is up 14.2% in 2024 and 39.5% over the past 52 weeks, slightly outshining AMD's gains over the same time frame.
Despite the underperformance, AMD has been trading above its 200-day moving average since November. However, the stock has been trading below the 100-day moving average since mid-April, indicating a slightly bearish price trend.
AMD's underperformance over the past year can be attributed to various factors, including inflationary pressures, geopolitical uncertainty, and intense competition in the industry. Furthermore, the company's heavy dependence on borrowings for its costly research and development activities makes it particularly vulnerable to the current high-interest-rate environment.
AMD stock plunged by almost 9% on May 1 after its Q1 earnings report. Though the company's top and bottom lines slightly beat expectations, concerns remain about its AI growth prospects.
Yet, Advanced Micro Devices has been capitalizing on the soaring demand for sophisticated chips in AI data centers, driven by the development of generative AI programs. The company recently announced the launch of its new AI processors, including the MI325X accelerator with 288GB HBM3E memory, set to hit the market in the fiscal Q4. This positions AMD as a formidable competitor to NVDA in the AI chip market.
To emphasize the stock’s underperformance, it is worth noting that Advanced Micro Devices’ top rival, NVDA, continues to outshine AMD. Shares of NVIDIA have surged a whopping 210.4% over the past 52 weeks and 142.2% on a YTD basis.
Despite Advanced Micro Devices' underwhelming stock performance, analysts are bullish on the stock's outlook. The stock has a consensus rating of “Strong Buy” from 34 analysts covering it, and the mean price target of $193.40 is a premium of 15% to current levels.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
