Key Points OpenAI and other leading artificial intelligence (AI) companies are using AMD's data center chips. The stock has nearly doubled year to date, but still offers value. 10 stocks we like better than Advanced Micro Devices › Spending on artificial intelligence (AI) technology is accelerating among the biggest and most profitable companies in the world. The stellar performance of some of the leading chip stocks could be sending strong signals to investors that this is still the early innings ...

Group 1 - Nvidia shares increased by 3.9% after announcing it will invest up to $100 billion in OpenAI and supply data center chips, boosting optimism about AI prospects [1][9] - Apple shares rose 4.3% following Wedbush's target price increase due to strong demand for the iPhone 17, while Tesla shares climbed 1.9% [1][9] - The S&P 500 technology sector led gains, ending 1.7% higher, contributing to a year-to-date increase of 13.8% and a 3.6% rise for September [1][6] Group 2 - Federal Reserve officials expressed skepticism about the necessity for further rate cuts, despite a recent quarter-point cut aimed at managing unemployment risks [2][3] - St. Louis Fed President Alberto Musalem and Atlanta Fed President Raphael Bostic emphasized that lowering inflation remains a priority, while Fed Governor Stephen Miran noted that monetary policy is "well into restrictive territory" [3][9] Group 3 - The Dow Jones Industrial Average rose by 66.27 points (0.14%) to 46,381.54, the S&P 500 gained 29.39 points (0.44%) to 6,693.75, and the Nasdaq Composite increased by 157.50 points (0.70%) to 22,788.98 [7][10] - Kenvue shares fell 7.5% amid concerns over new FDA guidance linking acetaminophen to autism, but rebounded by 4.7% after the announcement [8][10] - Advancing issues outnumbered decliners on both the NYSE and Nasdaq, with a volume of 18.65 billion shares traded, surpassing the 17.5 billion average over the last 20 trading days [9][10]

Group 1: Federal Reserve and Market Movements - The Federal Open Market Committee (FOMC) cut the Fed funds rate by 25 basis points, now between 4%-4.25%, with projections for two more cuts in 2025 [1] - Tesla's significant gains contributed to market increases, with the Nasdaq Composite achieving a sixth consecutive record close [1] - The S&P 500 Index reached a new record high, while the Cboe Volatility Index (VIX) ended a three-day winning streak [2] Group 2: Technology Sector Developments - Oracle continues to generate headlines, influenced by TikTok, while Tesla's recent performance yielded a 424% return for options traders [3] - Intel and Nvidia's partnership in data center chips contributed to Thursday's tech gains [3] - China-based companies Alibaba and Baidu benefited from AI trends, while AMD and Micron Technology had notable chart movements [4] Group 3: Commodities and Infrastructure - Nucor reduced its third-quarter guidance due to tariff impacts, while uranium stocks surged following plans to increase the U.S. uranium stockpile [5] - Corteva received a price-target increase from Deutsche Bank, indicating positive sentiment in the chemical sector [5] Group 4: Upcoming Economic Indicators - Upcoming GDP data and earnings reports from several companies, including Accenture, AutoZone, and Costco Wholesale, are anticipated next week [7]

Group 1: Market Opportunity - McKinsey & Company projects a 3.5-fold increase in global demand for AI-specific data center capacity by 2030, creating a multi-trillion-dollar market opportunity for Nvidia Corp [1] - The report anticipates that capital spending on data center infrastructure will exceed $1.7 trillion by 2030 [2] - The potential market opportunity for Nvidia, based on the projected demand of 156 GW by 2030, could reach $6.2 trillion [4] Group 2: Data Center Capacity Growth - Total data center capacity demand, including non-AI workloads, is expected to grow from 82 GW in 2025 to 219 GW by 2030 [2] - AI workloads alone are projected to expand from 44 GW in 2025 to 156 GW by 2030, accounting for 70% of total data center capacity by 2030 [3] Group 3: Challenges to Expansion - Significant hurdles for rapid data center capacity expansion include securing adequate power, overcoming supply chain bottlenecks, and navigating labor shortages [6][5] - The underlying demand for AI infrastructure may be vastly outpacing current market expectations, raising questions about market sentiment towards Nvidia [6] Group 4: Stock Performance - Nvidia's stock fell 0.040% to $177.75 per share, with a year-to-date increase of 28.51% and a yearly increase of 52.21% [7] - The SPDR S&P 500 ETF Trust and Invesco QQQ Trust ETF ended higher, indicating a positive market trend [7]

Company Overview - Serve Robotics is focused on developing autonomous last-mile logistics solutions, particularly for food delivery, and has recently partnered with Uber Eats to deploy 2,000 delivery robots [4][9] - The company has made over 100,000 deliveries since early 2022, achieving a 99.8% completion rate, indicating high reliability [8] Financial Performance - Serve generated $642,000 in total revenue during Q2 2025, a 37% increase year-over-year, but this is relatively small given its market capitalization of over $500 million [10] - Wall Street estimates suggest Serve's total revenue for 2025 could reach approximately $3.6 million, a 99% increase from 2024, with potential growth to $80 million by 2026 as the rollout of Gen3 robots completes [11] - The company reported a loss of $33.7 million in the first half of 2025, indicating significant financial strain as it seeks to commercialize its business [12] Investment Considerations - Serve's current valuation is high, trading at a price-to-sales (P/S) ratio of 317, which raises concerns about its investment attractiveness compared to Nvidia's P/S ratio of 30 [14][15] - Nvidia sold its entire stake in Serve, which may indicate concerns about the company's overvaluation and financial situation [3][17] - Serve has approximately $183 million in cash, which may only sustain operations until the end of 2026, raising the possibility of future capital raises that could dilute existing shareholders [13] Market Opportunity - The shift to autonomous delivery solutions is projected to create a $450 billion market opportunity by 2030, as current last-mile logistics are deemed inefficient [6] - Serve's Gen3 robots utilize Nvidia's Jetson Orin platform, enabling Level 4 autonomy for safe deliveries without human intervention [7]

Industry Overview - The semiconductor industry is experiencing a significant recovery, driven by optimism surrounding artificial intelligence (AI), particularly generative AI, which has increased demand for microchips [1] - The robust demand across various sectors has resulted in substantial revenue growth for chipmakers, contributing significantly to overall market performance and last year's market rally [2] Sales Performance - Worldwide semiconductor sales rose 3.5% sequentially in May, increasing from $57 billion in April to $59 billion, with a year-over-year surge of 19.8%, marking the 11th consecutive month of growth above 17% [4] - SIA President and CEO John Neuffer noted that global semiconductor demand remains high, with first-quarter sales surpassing the previous year's figures, particularly driven by a 45% year-over-year increase in the Americas [5] Future Outlook - The semiconductor market is projected to continue expanding at a double-digit pace into 2025, supported by strong demand for data center chips and memory products [7] - Global semiconductor revenues reached $627.6 billion in 2024, up 19.1% from $526.8 billion in 2023, with the first quarter of 2025 generating $167.7 billion, an 18.8% increase from the previous year [6] Investment Opportunities - Recommended semiconductor stocks include Taiwan Semiconductor Manufacturing Company Limited (TSM), Advanced Energy Industries, Inc. (AEIS), and RF Industries, Ltd. (RFIL), all of which have strong earnings growth potential and favorable Zacks rankings [3] - TSM's expected earnings growth rate for the current year is 34.1%, with a 19.8% year-over-year sales increase in May [9] - AEIS is expected to see a 39.1% earnings growth rate, while RFIL's earnings growth rate is projected to exceed 100% [11][12]

Core Insights - AMD is often overlooked by investors due to its second-place market share in the AI-driven data center accelerator market, trailing behind Nvidia [1] - CEO Lisa Su has a strong track record of exceeding expectations, and AMD's recent data center chips are gaining traction [2] - AMD has been consistently increasing its PC market share against Intel, indicating strong competitive positioning [2] - The long-term growth potential in AMD's core markets makes it a compelling investment opportunity [2] Market Growth Projections - Data center capital expenditure is projected to double over the next three years, with the data center accelerator market expected to grow from approximately $34 billion last year to $166 billion by 2030 [5] - The gaming GPU market is currently a $5 billion opportunity, anticipated to increase more than sixfold by 2030 [5] - The automotive GPU market is expected to reach $45 billion by 2030, reflecting a 33% annualized growth rate [5] - The global GPU market is forecasted to grow from $62 billion in 2024 to over $460 billion by 2032, representing a 29% annualized growth rate [5]