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Cathie Wood, one of the most popular and also one of the most controversial investors on Wall Street, made a bold move to start 2025. She scooped up $9.94 million worth of Advanced Micro Devices (AMD) shares, while other investors remain cautious about the semiconductor stock.
As AMD stock struggles to maintain momentum after its AI-fueled rally in 2023, Wood’s substantial purchase raises an intriguing question: Is she seeing something others are missing?
The polarizing tech investor, whose flagship ARK Innovation ETF (ARKK) delivered a stunning 153% return in 2020, has a history of making contrarian bets on transformative technologies. But her recent track record tells a more complicated story.
While the S&P 500 Index ($SPX) has delivered robust returns over the past five years, ARK Innovation has significantly underperformed, leaving most on Wall Street wondering if Wood’s big-picture vision will translate into investment success.
The latest move into AMD comes at a critical juncture for the chipmaker. Despite positioning itself as a key player in the AI race, AMD faces stiff competition from industry leader Nvidia (NVDA) and growing concerns about its ability to meet surging demand for AI processors.
Let’s see if investing in AMD stock at the current valuation makes sense.
Is This AI Stock a Good Buy?
AMD is a semiconductor company that designs and produces computing and graphics processors. Its portfolio includes high-performance processors for desktop and laptop computers (Ryzen series), graphics cards (Radeon), and server processors (EPYC) designed for data centers and enterprise applications.
Further, AMD creates custom chip solutions for gaming consoles and develops processors for AI and machine learning applications. Founded in 1969 and headquartered in Silicon Valley, AMD has established itself as a key player in consumer and enterprise computing markets, competing directly with industry giants in the CPU and GPU spaces.
In a recent Barclays Tech Conference interview, AMD CFO Jean Ho discussed the company’s significant market share gains, which touched 34% in server CPUs. The discussion highlighted AMD’s AI momentum, with Mi300 GPU revenue growing from zero to projections over $5 billion in 2024. In 2025, AMD expects continued AI infrastructure investment, new product launches (Mi325 and Mi350), and broader customer adoption beyond current partners like Microsoft (MSFT) and Meta (META).
A Strong Performance in Q3 2024
AMD reported strong third-quarter results, with revenue increasing 18% year-over-year to $6.8 billion, driven by record sales for its data center segment. Data center revenue more than doubled to $3.5 billion, with EPYC CPU gaining market share and MI300X GPU adoption expanding significantly with key customers like Microsoft and Meta. The company raised its data center GPU revenue forecast for 2024 to over $5 billion. Looking ahead, AMD expects Q4 revenue of approximately $7.5 billion, up 22% year-over-year.
Wall Street expects AMD sales to rise from $22.68 billion in 2023 to $46 billion in 2027. Comparatively, adjusted earnings are forecast to expand from $2.65 per share in 2023 to $8.88 per share in 2027. Further, free cash flow is projected to rise from $1.12 billion to $9.75 billion in this period. If AMD stock is priced at 35x trailing earnings, it will trade around $250 in early 2028, indicating upside potential of over 100% from current levels.
The Bottom Line on AMD Stock
Out of the 38 analysts covering AMD stock, 30 recommend “Strong Buy,” one recommends “Moderate Buy,” and seven recommend “Hold.” The average target price for AMD stock is $188.36, 55% above the current trading price.
