Move over Nvidia. There's a new AI kid in town. Microprocessor maker Advanced Micro Devices is challenging Nvidia's dominance in the artificial intelligence systems market. AMD's latest move is its announcement on Monday that it will buy ZT Systems for $4.9 billion. On Wednesday, the Relative Strength Rating for AMD stock shot up 10 points to 76.
The upgraded 76 RS Rating means that AMD bested 76% of all other stocks in IBD's database for price performance over the past year. It's a substantial rating upgrade. Market research shows that the market's biggest winners often have an RS Rating of at least 80 in the early stages of their moves. See if Advanced Micro Devices can rise that final four points and hit that benchmark.
Can You Really Time The Stock Market?
AMD Smallest In AI Trio, But Growing Fast
For decades Intel was the dominant microprocessor maker in the computer market. Today, Magnificent Seven company Nvidia is seen as the leading chipmaker with about $80 billion sales a year. Intel has about $55 billion, and AMD has a little more than $23 billion annual sales.
AMD chips go into AI systems, PCs, notebooks, network servers and other markets. Intel and AMD are trying to get a slice of the growing AI chip market, which Nvidia dominates. AMD has one advantage over Intel. It already had a graphics co-processor to go with its microprocessors before the dawn of the AI era.
Buying privately held ZT Systems will significantly bolster Advanced Micro's AI credentials. ZT Systems is one of the largest private providers of AI training and inference infrastructure in the world. It serves some of the biggest cloud-computing companies.
AMD stock hit an all-time high at 227.30 on March 8. From there it consolidated, dropping as low as 121.83 on Aug. 5. Then it started rising again. AMD traded around 157 Wednesday afternoon, up fractionally for the day.
Advanced Micro Devices is now considered extended and out of buy range after clearing a 125.72 buy point in a second-stage cup with handle. See if the stock forms a new pattern or follow-on buying opportunity like a three-weeks tight or pullback to the 50-day or 10-week line.
Earnings, Revenue Growth Rates Accelerating
Earnings grew 19% last quarter to 69 cents per share, up from 3% growth the prior report. Revenue growth also increased, from 2% to 9%, or $5.84 billion.
AMD has an 86 Composite Rating, out of 99, putting it in the top 14% of stocks overall. However, top growth stocks often have a 90 or better Composite. Look for AMD to cross that threshold too.
It also has an outstanding 92 Earnings Per Share Rating. And it carries a B- Accumulation/Distribution Rating on an A+ to E scale. The B- rating shows that institutional investors like mutual funds and insurance company funds are buying more AMD shares than selling.
Advanced Micro Devices holds the No. 7 rank among its peers in the 39-stock Electronics-Semiconductor Fabless industry group. Nvidia, Broadcom and Cirrus Logic are among the top five highly rated stocks in the group.
The unique IBD Relative Strength Rating measures market leadership by showing how a stock's price movement over the last 52 weeks compares to that of the other stocks in our database.
Please follow James DeTar on X, formerly known as Twitter, @JimDeTar
RELATED:
Chip Stocks To Watch And Semiconductor Industry News
Get Full Access To IBD Stock Lists And Ratings
Which Stocks Are Showing Improved Price Performance?
IBD Live: A Great Tool For Daily Stock Market Analysis
Ready To Grow Your Investing Skills? Join An IBD Meetup Group!
