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Advanced Micro Devices (NASDAQ:AMD) is sailing along the turbulent waters of growth, reminiscent of its standing three decades prior. However, the latest tempest in the tech world centers around Nvidia (NASDAQ:NVDA), which made waves with its astounding earnings on February 21. A prior storm was stirred by Intel (NASDAQ:INTC), once the powerhouse of the “WinTel” empire alongside Microsoft (NASDAQ:MSFT).
Having disembarked from the AMD bandwagon recently, cautioning against purchasing what seems like prime steak priced as ground beef, the subsequent price increase almost brings AMD back to square one. The question lingers – what lies ahead?
AMD Stock Maintains Stability
Despite my reservations, AMD remains a solidly managed company worth considering for investment. Nevertheless, AMD stock lags behind as Nvidia, with its cutting-edge CUDA toolkit, proves to be the frontrunner in the tech race.
As a discerning observer rather than an oracle, I, like many others, underestimated Nvidia’s earnings potential. Those who exited prior to February 21 are likely kicking themselves now. Yet, I stood firm.
According to projections from 31 analysts, AMD’s business is poised for an upswing. Forecasts predict a revenue of $5.4 billion for the quarter and an impressive $25.8 billion for the year, with a projected 50% surge in profits.
Interestingly, AMD’s success is not solely reliant on its rivalry with Nvidia in graphics processing, but also on an older technology prevalent in the current desktop landscape: Zen5. This CPU, expected to debut in the latter half of the year, is set to make significant waves, as evidenced by CEO Lisa Su’s forthcoming keynote address at CompuTex.
Assessing AMD’s Competitive Edge
Investors holding AMD stock have fared well, witnessing a doubling of their investment over the past year. However, the standout performer remains Nvidia, boasting a 25% surge since the year’s commencement and a remarkable 215% growth over the past year.
Emphasizing Nvidia’s prowess, I have consistently highlighted the pivotal role of its software. While chip design inherently incorporates software, Nvidia’s CUDA toolkit places it at the forefront of AI operations. Despite efforts by tech giants like Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL), Microsoft, and Amazon.Com (NASDAQ:AMZN) to diversify, the indelible mark of CUDA has hindered any significant shift.
While the introduction of ZLUDA provides a workaround enabling Nvidia’s code to run on AMD or Intel hardware, uncertainties loom following AMD’s recent disassociation from the project. This echoes past failed attempts at circumventing dominant players in the tech sphere, mirroring the early ’90s Windows alternatives that ultimately faltered.
Navigating the Terrain
Once a rocket launches, hesitation only leads to missed opportunities. Nvidia’s trajectory, fueled by CUDA, is firmly established, as affirmed by its latest earnings report.
While potential growth for AMD hinges on its competition with Intel, the evolving tech landscape demands upgrades for AI integration across client devices, paralleling server requirements. Holding AMD stock could serve as a prudent defensive measure, especially amidst its recent market performance. However, for those with a more aggressive investment approach, or aiming towards retirement, alternative strategies may be considered.
As of the time of authorship, the writer had LONG positions in AMZN, NVDA, INTC, MSFT, and GOOGL. The views expressed in this article are personal and subject to the InvestorPlace.com Publishing Guidelines.
