Advanced Micro Devices Inc (AMD) has been in a sharp uptrend in recent years on the back of rapid growth in the likes of cloud-computing, gaming, and, of course, data centres.

In fact, if you had invested just $1000 in the chipmaker in early 2019 when its shares were priced at $24 only – you would have made over $80,000 on that investment by now.

That’s a whopping 80-fold return in less than five years.

But is it too late to invest in AMD stock now? Let’s explore.

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AMD stock is a major AI play

The recent rally in $AMD has been related to its AI push for the most part.

Last year, the semiconductor behemoth announced Instinct MI300X – a sophisticated chip designed for artificial intelligence related tasks that allegedly beats the Nvidia H100 in terms of performance.

AMD CEO Lisa Su expects the AI chips market to hit $400 billion valuation in about five years.

The sheer size of that market suggests AMD stock doesn’t necessarily have to beat $NVDA.

It just has to maintain a strong enough position in artificial intelligence to remain lucrative for its long-term investors.

Experts at Citi bank are confident that $AMD could represent up to 10% of the $400 billion artificial intelligence chips market.

That signals massive opportunity for AMD shares to grow considering the Nasdaq-listed firm generated about $22.7 billion in total revenue in 2023.

Microsoft and Meta to use AMD’s AI chip

It is also worth mentioning here that even though Advanced Micro Devices remains second to Nvidia, its AI chips have already started gaining traction from notable customers like Microsoft and Meta Platforms – both of which are slated to use its MI300X as Invezz reported here.

That also suggests continued success for AMD stock. The multinational also recently bought an AI software startup called Nod.AI (read more).

AMD shares do not currently pay a dividend yield, though.

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Are AMD shares worth buying today?

Note that AMD shares, however, are not cheap per se at a forward price-to-earnings ratio of about 57 – but it, nonetheless, looks more reasonably priced compared to peer Nvidia Corp.

Analysts expect Advanced Micro Devices to grow earnings at a 30% compound annualised rate which means it’s conceivable that it will grow into that valuation moving forward.

The chipmaker reported $667 million in net income for Q4 last month versus $21 million only a year ago.

Wall Street currently sees upside in AMD stock to $270 at the higher end of its range which suggests another 35% upside from here.

It’s important to remember that a company like $AMD that already has a market cap of well over $300 billion is unlikely to deliver a similar 80-fold return moving forward as it did between 2019 and 2024.

But fundamentals do suggest it will still continue to be a market-beating investment in the coming years as the California-based company continues to roll out new AMD processors and AMD GPUs.  

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