Prediction: 2 Stocks That Will Be Worth More Than AMD 5 Years From Now

Core Viewpoint - Advanced Micro Devices (AMD) has significantly underperformed the broader semiconductor industry, losing nearly 21% of its value in 2024, while the PHLX Semiconductor Sector index gained 24% during the same period [1][2]. Group 1: AMD's Performance - AMD's stock has seen a 141% gain over the past five years, which is lower than the 170% increase in the PHLX Semiconductor Sector index [2]. - Factors contributing to AMD's underperformance include weakness in the personal computer market, soft demand for gaming consoles, and failure to capitalize on the artificial intelligence (AI) market, unlike competitors such as Nvidia [3]. Group 2: Future Competitors - Palantir Technologies has experienced a remarkable 301% stock surge in the past year, bringing its market cap close to that of AMD [5]. - Analysts project Palantir's annual revenue for 2024 to reach $2.8 billion, a 26% increase from the previous year, with growth expected to continue at over 20% for 2025 and 2026 [8]. - Palantir's customer base grew by 39% year-over-year in Q3 2024, with a net dollar retention rate of 118%, indicating strong customer adoption of its AI platform [9][10]. Group 3: Palantir's Market Position - The AI software market, valued at $98 billion last year, is projected to grow at an annual rate of 30% through 2030, potentially reaching $391 billion [12]. - Palantir's revenue increased by 30% year-over-year to $726 million in Q3 2024, with earnings growing at a faster pace of 43% [12]. Group 4: Arm Holdings - Arm Holdings has seen a 100% stock increase in the past year, significantly closing the market cap gap with AMD [14]. - Arm dominates the smartphone market, powering 99% of smartphone application processors, and has a growing presence in the Internet of Things (IoT) market [16]. - Arm's share of cloud computing chips has risen to 15% in fiscal 2024 from 9% in fiscal 2022, and its networking equipment market share increased to 28% from 23% [17]. Group 5: Arm's Growth Prospects - Arm's earnings are expected to grow 31% in the next fiscal year to $2.04 per share, following a 23% increase to $1.56 per share in the current year [18]. - The overall semiconductor market is anticipated to exceed $1 trillion in annual revenue by 2030, compared to $627 billion last year, which bodes well for Arm's growth [19].