Ten years ago, Advanced Micro Devices’ (NASDAQ: AMD) stock was a mere $3 a share. Battling giants like Intel (NASDAQ: INTC) and Nvidia (NASDAQ: NVDA), AMD was struggling to keep pace. However, under the leadership of Lisa Su, who assumed the role of CEO in October 2014, the company underwent a remarkable transformation. By enhancing its chip technology, expanding its range of custom and embedded chips, and capitalizing on Intel’s missteps, AMD surged to new heights.
Currently trading at $170, AMD’s stock has experienced a meteoric rise. A $20,000 investment at $3 a share would have multiplied to $1.13 million today. Let’s delve into the factors behind AMD’s ascent to millionaire-making status and explore why it holds the potential to create more wealthy investors in the future.
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The Resurrection of AMD: How Lisa Su Steered the Course
AMD’s market share in the x86 CPU segment dwindled significantly from 2006 to 2016, dropping from 48.4% to 17.8%. The company faced challenges stemming from its acquisition of ATI, Intel’s technological lead, and its own product missteps, which led to revenue declines. However, Lisa Su’s strategic interventions revived AMD.
Su’s approach was three-pronged. She bolstered AMD’s enterprise, embedded, and semi-custom chip business by supplying custom APUs for gaming consoles. The company also revamped its CPU offerings with Ryzen CPUs for PCs and Epyc CPUs for servers, rectifying past flaws. Additionally, a shift to Taiwan Semiconductor Manufacturing gave AMD a significant edge over Intel in chip technology.
A key turning point was AMD’s ability to seize the market share in x86 CPUs, eclipsing Intel’s dominance. From 2016 to 2023, AMD’s revenue soared from $4.32 billion to $22.68 billion, fueling its resurgence.
Potential for Further Prosperity: Why AMD Holds Promise
AMD’s growth trajectory is propelled by several favorable winds. Intel’s tumultuous state, coupled with AMD’s outsourcing strategy to TSMC’s cutting-edge foundries, positions it well for continued CPU market gains. Furthermore, the increasing demand for AI-related GPUs creates an opportunity for AMD to expand its footprint in this segment, challenging Nvidia’s supremacy.
The acquisition of Xilinx in 2022 further solidifies AMD’s presence in the AI market. Intel’s rumored divestment of Altera could consolidate AMD’s position as a comprehensive supplier in the data center space, encompassing CPUs, GPUs, and FPGA circuits.
Analysts predict a robust revenue growth for AMD from 2023 to 2026, with a significant uptick in EPS. While AMD’s valuation may seem steep at 50 times forward earnings, its growth potential justifies the premium. If the company maintains its growth trajectory, reaching an EPS of $32 in 2035, its stock price could witness a staggering increase, potentially generating substantial wealth for investors over the long term.
Considering AMD’s trajectory, investing in the company now could pave the way for significant returns in the future, making it an enticing proposition for those seeking long-term wealth creation.
Deciphering the Investment Potential: Is Advanced Micro Devices Worth Your Attention?
Before venturing into Advanced Micro Devices’ stock, it’s crucial to weigh your options carefully. The Motley Fool Stock Advisor team has flagged AMD as one of the top prospects among the stock market’s offerings, signaling a promising investment opportunity.
The Hunt for Promising Stocks
Investors are always on the lookout for the golden egg — that one stock that could potentially skyrocket their returns and secure a prosperous future. And in this quest, there are always lists circulating, recommending various stocks. But, one notable absentee in the lineup of enticing investments was Advanced Micro Devices.
The Historical Triumph of Nvidia
Amidst the banter about potential market-winners, one can’t help but recall Nvidia’s grand entrance to this elite list back on April 15, 2005. For the early birds who had the vision and gumption to invest $1,000 based on the recommendation, the whopping sum of $812,893 would have bloomed in their accounts like a rare orchid in full bloom.
A Beacon of Success: Stock Advisor Service
The Stock Advisor service, likened to a guiding light in the tumultuous sea of investment, has not shied away from its success stories. Boasting a track record that outshines the S&P 500 index by more than fourfold since its inception in 2002, it has been a harbinger of hope for prudent investors.
Stock Advisor provides investors with a roadmap towards financial success, offering insights on portfolio construction, regular analyst updates, and a bimonthly unveiling of new stock picks. This tried and tested formula has been the bedrock of many investors’ success stories.
The Path Less Taken
While many seek the safety of popular investments and well-known companies, taking a less-traveled path, as exemplified by the Stock Advisor’s past recommendations, could prove to be the differentiating factor in one’s investment portfolio. Sometimes, diamonds are found where no one else is looking.
Discover the Hidden Gems in the Market »
Over time, Stock Advisor’s returns have stood the test of time, a testament to the underlying principles and strategies that guide their stock selections. It’s a comforting thought to know that in the ever-changing landscape of the stock market, there are steadfast beacons to rely on.
As investors navigate the choppy waters of the market, expert guidance and insightful recommendations can serve as the north star, guiding them safely to the shores of financial prosperity, much like the Stock Advisor service has done for many since its inception.