Advanced Micro Devices, Inc. (AMD) has seen its shares soar 107.1% over the past year, outperforming rival NVIDIA Corporation (NVDA), which gained 63.8% during the same period. The surge in AMD’s stock is largely attributed to the increasing demand for chips driven by advancements in artificial intelligence (AI). With both companies vying for dominance in the chip market, analysts are left to ponder whether AMD can maintain its momentum and if now is the right time to invest.
Despite entering the AI sector later than NVIDIA, AMD has swiftly closed the gap by providing advanced and competitively priced products. The recent rise in demand for NVIDIA’s Blackwell chips has led several major clients, including OpenAI, to turn to AMD’s Instinct AI accelerators as an alternative to meet their needs. This shift underscores the growing perception of AMD’s offerings as a viable competitor, particularly among high-profile organizations like International Business Machines Corporation (IBM), which is leveraging AMD technology to further its quantum computing initiatives.
Other notable partnerships are also forming around AMD’s product line. For instance, Oracle Corporation and AMD recently collaborated to launch the first AI supercluster featuring 50,000 AMD graphics units on Oracle Cloud Infrastructure. Additionally, Cisco Systems, Inc. is teaming up with AMD to expand AI cluster deployments with G42 in the UAE, further validating AMD’s presence in critical AI applications.
AMD’s ROCm software, although not yet as popular as NVIDIA’s CUDA platform, has experienced a significant uptick in downloads, indicating a growing acceptance of AMD chips in various sectors. The company’s smaller market size compared to NVIDIA offers it ample opportunity for growth in the rapidly expanding AI market. As AMD continues to secure new customers, its growth trajectory could potentially outpace NVIDIA’s by a considerable margin.
In contrast to NVIDIA, AMD’s business model is better insulated from the risks associated with a possible AI market bubble. A substantial portion of AMD’s revenue is generated from its gaming division rather than being overly reliant on data centers, which mitigates potential downside risks in an uncertain market.
Looking ahead, AMD’s aggressive push into the AI sector, combined with its competitive pricing strategy and diversified business model, positions the company to potentially outpace NVIDIA. Management remains optimistic about AMD’s financial outlook, projecting fourth-quarter 2025 revenues to be around $9.6 billion, with an expected growth rate of 25% year-over-year. This projection also includes a 4% sequential gain, according to information provided by AMD.
Brokers share this optimism, with an estimated average short-term price target for AMD stock set at $286.49. This represents a 13.6% increase from the last closing price of $252.18, with some forecasts suggesting a high target of $380, indicating a potential upside of 50.7%.
Currently, AMD holds a Zacks Rank #2 (Buy), reflecting the growing confidence among analysts in the company’s trajectory. As the chipmaker leverages its strengths in AI and gaming, it remains poised for rapid growth amid an evolving technological landscape.
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