AMD Stock Rebounds. Is Its AI Edge Built to Last?
Team Rule Breakers and Team Hidden Gems have recommended AMD across eight active Motley Fool services, and it has never carried a sell recommendation.
On November 2, AMD's stock soared around 5% after the company reported staggering data center sales, nearly doubling from a year prior. Management forecasted fourth-quarter revenue to be approximately two-thirds higher than the same period last year. Team Rule Breakers had recommended AMD as early as January 2024, even weeks after the firm unveiled its MI300 AI chips.
The chipmaker's advantage in the server processor market has long been evident, but its AI business was just beginning when it launched the MI300 chips. Since then, the stock has more than tripled and outperformed the S&P 500. Rule Breakers and Hidden Gems services have consistently recommended AMD across eight active Motley Fool offerings, never issuing a sell rating.
Team Rule Breakers emphasizes Sustainable Competitive Advantage, asking how a company will maintain its edge over rivals over the next decade. AMD's moat currently lies in its cost advantage, often delivering better performance per dollar than Intel. However, in AI chips, the company has yet to establish a structural moat. Several big cloud companies are also developing their own AI chips, potentially limiting AMD's market share. Nonetheless, AMD's recent record quarter suggests strong customer demand for its AI products.
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