AMD's Stock Has Doubled This Year. Here's Why It's Not Too Late to Invest.

Core Viewpoint - The semiconductor stock of Advanced Micro Devices (AMD) is becoming increasingly attractive due to its growth potential in the AI sector, despite its current high valuation metrics [1][7]. Group 1: Performance Comparison - In 2023, AMD has outperformed Nvidia with returns of 115% compared to Nvidia's 42% [2]. - Prior to 2023, AMD was not seen as a major competitor to Nvidia, which led to lower returns [3]. Group 2: Growth Potential - AMD's chip business is experiencing significant growth, with double-digit growth rates in recent quarters, indicating a successful ramp-up in its AI chip business [4]. - OpenAI is planning to become a major customer and potential investor in AMD, which could enhance AMD's market position [6]. Group 3: Valuation Metrics - AMD's trailing price-to-earnings (P/E) ratio is around 160, which may seem high, but its forward P/E ratio is less than 29, making it more attractive for growth investors [8]. - The price-to-earnings-growth (PEG) ratio is approximately 0.5, suggesting that AMD could be undervalued as a growth stock [9]. Group 4: Future Earnings Outlook - CEO Lisa Su estimates that AMD could generate tens of billions of dollars from its AI business in the coming years, indicating strong future earnings potential [10]. - AMD's market capitalization is currently $420 billion, with expectations of reaching a $1 trillion valuation as it captures more market share from Nvidia [11].