Is AMD the AI Underdog About to Break Out?

Everyone’s drooling over NVIDIA, but AMD just launched a chip that outperforms Blackwell. Yeah, the same Blackwell that turned NVIDIA into a $4 trillion beast.

And here’s what people are missing: AMD’s got 38% YTD growth, a 6X jump in earnings, and a chip comeback in China that could add billions in revenue.

The real question? Can AMD dethrone NVIDIA… or is this just another AI head fake?

You’ll find out and I’ll show you exactly how I’m thinking through the risk, the upside, and the timing.

Let’s get into it.

AMD’s Overview

Advanced Micro Devices, or AMD, is a multinational semiconductor powerhouse known for designing and developing affordable computer processors and graphics units. If you’re using a PC or laptop, take a minute to look under the hood. If it doesn’t run on macOS, Intel, or NVIDIA chips, it’s likely using AMD.

But AMD isn’t just a budget-friendly alternative. It’s earned its place in the market by consistently delivering strong performance at a competitive price. And amidst all the hype over NVIDIA, 43 analysts rate the AMD stock a “Moderate Buy”, a consistent consensus over the past three months. 

Why It’s in the Spotlight

So, what keeps AMD a buy?

In June, AMD launched its newest MI350-series chips geared toward AI workloads. These processors outperform NVIDIA’s Blackwell GPU, which is the company’s most advanced AI platform. It’s interesting that NVIDIA is currently the go-to for data centers, cloud providers, and labs.

NVIDIA has long been the dominant force in AI hardware, but with AMD’s new chips and growing momentum, the question remains: is AMD a real threat to NVIDIA? 

Aside from that, the easing of export restrictions will be beneficial for AMD. Similar to NVIDIA’s H20 return to the Chinese market, AMD’s MI308 AI chips will also make a comeback.

Stock Price

Now, after an extended downtrend from October 2024 to April 2025, AMD stock is regaining much-needed ground. 

The stock is currently trading at $166, about 4.36% away from its 52-week high at $174.05. AMD’s recovery in the last few months has convinced some investors that a new uptrend may be forming, especially as AI and data center demand continue to grow. On a year-to-date basis alone, AMD stock is up by around 38%. That’s nothing to sneeze at. 

Financials

However, it pays to check whether the stock’s excellent performance has solid foundations. To do that, let’s review the company’s financials. 

AMD reported an outstanding Q1. And they’ll be reporting Q2 on Aug 5, which is why I’m pretty excited. 

In Q1, we saw that AMD’s sales were up 35.9 percent year-over-year, and net income rose 476.4% to $709 million from the same quarter last year. It’s EPS posted a 450% increase, coming in at $0.44.

For those who are unfamiliar with EPS, or Earnings per Share, it tells you how much profit a company makes for each share of its stock. Say a company has a net income of $1,000 and 1000 shares outstanding. That means it earned $1 for every share investors hold. Strong earnings per share can signal efficient operations and value for shareholders. So, AMD’s EPS jumping 6x year-over-year reflects a sharp improvement in profitability, driven by stronger operations and rising demand.

Now, let’s talk about the stock. AMD has historically performed well. 

Let’s try to put it into perspective. A $1,000 investment 3 months ago would be worth $1,725 today. And that same $1000 invested 5 years ago would be worth $2,150.

Now, some investors prefer dividend-paying stocks for the regular income. But capital appreciation, when it goes right, can be even more rewarding, especially with a company like AMD. Instead of paying dividends, AMD reinvests profits into innovation and growth. That’s a big reason why the stock has climbed so much over the years. 

The only question left is: Can AMD’s stock price continue to increase and sustain its momentum?

Growth Catalysts

Let’s look at the catalysts that can propel AMD further.

The biggest thing investors are looking at is the return of the MI308 chip in China.

In April, AMD’s  MI308 chips were restricted from export in China as part of the U.S. government’s export controls.  As a result, the company disclosed that the loss in revenue is estimated to reach $800 million

Fortunately for investors, AMD confirmed that the U.S. Department of Commerce has stated the license for MI308 chips is “moving forward for review” and that the company plans to resume shipments as soon as the licenses are approved.

And that’s been a big deal for investors. Since April, the stock is up over 72%. Once it starts selling again in China and regains all the missed sales, I can see it rising further. But, I guess that we’ll know more in Q2 next week. 

Risks & Red Flags

Now, it may seem that I am very bullish on AMD, but, like other companies, it also has a fair share of risk. 

The biggest threat to AMD is its ability to deliver according to expectations, and, of course, the competition from NVIDIA and the broader market.

NVIDIA became the first $4 trillion company thanks to its dominance in the tech industry. As the world increasingly relies on Artificial Intelligence, NVIDIA is leading the way and powering its rapid growth. Blackwell, one of the company’s most advanced AI chips, is designed to handle the massive computing needs of modern AI systems. It offers incredible speed and efficiency, making it a key part of everything from data centers to cutting-edge research. 

That said, AMD cannot afford to fumble. The company is building hype over its MI400-series chips and has unveiled its goal to improve significantly in 2030. However, a significant delay in its expected product launch, or simply failing to meet the expectations the company declared, can cause a massive shift in investor and analyst sentiment. 

This highlights the cut-throat competition in the industry. However, I think that this pressure is a make-or-break situation for AMD. Either it rises above the competition, or it sinks and try to find its way back again.

Valuation Breakdown

Now, you might be wondering, is it the right time to invest in AMD? Well, let’s look at the valuation and compare it with its industry peers.

Let’s answer that by looking at the price-to-sales ratio, or P/S. It is a metric that tells you how much investors are paying for every dollar of a company’s revenue. For example, a P/S of 10 means you’re paying $10 for every $1 the company makes in sales. 

AMD currently has a price-to-sales ratio of 9.87, while NVIDIA trades at a much higher 32.24. That suggests AMD may offer better value, especially if its AI business continues to grow.  We can say that AMD is undervalued compared to NVIDIA, which may suggest upside potential.

Speaking of upside, the stock is priced $154.72 at the time of writing. It has a 52-week high target of $200, suggesting a potential 29.3% increase. In my experience, many stocks can surpass their initial high target once they go on a bullish run. However, there are also cases where the opposite happens.

Who Should Buy This?

If you have been watching my videos, you know that I’m very conservative. I don’t go all in on anything, and I like companies with clear competitive advantages.

I think investors can consider AMD because of their long-term tech growth. AMD remains highly relevant and a real competitor to NVIDIA. It’s not just about promises, but they are delivering cutting-edge technology and making smart moves to scale. Despite setbacks, AMD’s innovation and long-term vision show it can hold its own in the AI and data center space. 

I mean, if you’d invested $1000 in AMD 10 years ago, it would be worth $8,500 today. That means it doubled three times in 10 years, which is incredible. And I can see it happening again.