This AI Stock Is Cheaper Than AMD and Crushing It in Returns

Core Insights - Advanced Micro Devices (AMD) has become the best-performing stock in the S&P 500 Index over the past month, with shares surging more than 56% to reach record highs, driven by investor confidence in its role in the artificial intelligence (AI) market [1] Group 1: Strategic Partnerships and Developments - AMD's stock received a boost from IBM's announcement that it could run a quantum computing error correction algorithm on AMD chips, following a multibillion-dollar partnership with OpenAI [2] - The partnership with OpenAI is expected to reshape AMD's product roadmap and enhance its presence in the AI hardware space [2] - AMD deepened its relationship with Oracle, with Oracle Cloud Infrastructure set to launch the world's first publicly available AI supercluster powered by AMD's Instinct MI450 Series GPUs, with initial rollout planned for Q3 2026 [3] Group 2: Market Position and Financial Outlook - AMD is well-positioned to capitalize on the growing global investments in AI and cloud infrastructure, with its GPUs, EPYC CPUs, and networking technologies forming a robust ecosystem for intensive AI workloads [4] - Despite AMD's strong prospects, its stock valuation has risen significantly, trading at a forward price-earnings (P/E) ratio of about 81.1 times, indicating that investors are pricing in strong growth [5][6] - Analysts expect AMD's earnings to rise by 68.2% in 2026, but the high valuation leaves little room for error [6] Group 3: Competitive Landscape - Other semiconductor companies, such as Micron Technology, are offering better value, with Micron's shares soaring approximately 177% year-to-date compared to AMD's 113% gain [5] - Micron's valuation remains attractive relative to its earnings growth potential, presenting a more compelling entry point for investors [5]