For the past five years it has been fertile for Advanced micro devices(NASDAQ: AMD) Investors, as an investment of $ 1,000 earned in shares half past half a decade ago, is now worth almost $ 2,200 from this writing.
However, in order to put things in perspective, 118% jump in AMD shares for the last five years is lower than 178% of jumps that have jumped PHLX sector sector index in the same period. The past year has been particularly difficult for AMD investors, as the shares have dropped 41% of their value during this period. This great fall can be attributed to incompetence of AMD to use the flourishing demand for Artificial intelligence (AI) chips, the market on which rival rivals are Nvidia established a dominant position.
But then AMD’s recent results were solid, and the company has more than one catalyst that could help revive its wealth of shares in the next five years. We will look more closely at AMD’s potential growth drivers and check why it may be a good idea to buy and keep this stock over the next five years.
AMD -ov financial effect has been mixed in the last five years. While the revenues and earnings of the company increased in 2020, 2021 and 2022 due to the strong sales of their central processing units (CPU -A) and graphics cards used in personal computers (PCS), its DNA line growth is after a strong start.
That’s because Demand for computers missing After a strong sales in the years of Roman Koronavirus Pandemi. AMD remained excess stock on his hands and had to write it down, which led to the rapid fall of the company’s earnings. In the meantime, the business of the company’s data center was in a fine form throughout this period because he continued to receive the share of the CPU server from Intelligence.
But then, sales of playing consoles from Sony and MicrosoftThe AMDs of the AMD semi-clumps started to mature and cite these technological giants to order fewer orders. Throw the fact that AMD is far behind Nvidia on the market for graphics cards for games, with a share of only 10%; It is easy to understand why the playing company is fighting for a towing game.
Thus, the mixed effect of different AMD different companies in the last five years has been a shares performance. However, the good news is that all the considered segments are likely to enjoy the solid growth in the next five years, on the path for greater progress in AMD supplies.
The effectiveness of AMD will depend on the health of key segments such as games, data centers and PCs for the next five years. A good part is that all these business segments are likely to enjoy secular growth thanks to diverse catalysts.
For example, playing a game company should benefit from the arrival of new playing consoles from Microsoft and Sony. The current generation of the console is five years old. The new one will probably arrive in the next two to three years, as both Sony and Microsoft have historically released a new generation of console every seven to eight years.
Sony and Microsoft are expected to publish their next generations of 2026 or 2027. This could provide AMD with semi-gathering business, as the console manufacturers chose to supply a processor for their next general console.
Going from the Games to PCS, AMD has already begun to witness a solid traction in this market. The revenue of the company client segment increased by an impressive 52% in 2024. To a record $ 7.1 billion, thanks to “strong demand for AMD Ryzen processors in the desktop and mobile device”. The prospects for a computer market in the next five years look bright due to the occurrence of the generative AI.
According to one estimate, the AI PC market is expected to jump by almost 5x between 2024 and 2030. This is good for the long-term odds of AMD, especially since the company has earned a higher share of the PC processor market. The chip manufacturer finished 2024 with almost 25% of the CPU client market under his control, which is more than five percentage points from the previous year, according to Mercury Research.
His share of revenue on the client’s computer market has grown faster, jumping 8.4 percentage from year to year. This indicates AMD’s improvement in the price of the PC processor market, as its share of revenue is improved with a faster pace than the unit of the unit. Moreover, it will not be surprising when AMD gets more market share because it is not expected that the rival Intel will launch a new CPU on the desktop until next year.
As such, the stage seems to have been set up for healthy growth in AMD games and segments of PC for the next five years. At the same time, business with the company’s data center also becomes better, although it plays the second puzzle on Nvidia on the AI GPU market (graphic processing). The AMD data center revenue almost doubled last year at a record $ 12.6 billion, guided by strong sales and CPU -AA server and GPU.
The company sold at least $ 5 billion in the GPU data center 2024. AMD predicts that his GPU can grow up to “dozens of billions, as we pass through the next few years.” In fact, AMD could reach solid revenues in the GPU in the long run, even if it manages to extinguish a small part of this market for itself.
In the end, it can be concluded that AMD seems to have been set up for extraordinary growth in earnings over the next five years. Because of this, the purchase of this stock is currently seemed to be non-famed, especially given its price/ratio of earnings and growth (PEG ratio) of only 0.42 based on his five-year growth of projecting, Yahoo! Finances.
The ratio of PEG less than 1 means that the stock is underrated in the light of growth expected, and AMD trades significantly below that threshold. So, investors who want to buy growth stocks that are traded at attractive levels can consider adding AMD to their portfolio. This stock looks positioned for impressive long -term progress.
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Sharp Chauhan There is no position in any of the shares mentioned. Motley Fool has positions and recommends advanced micro devices, Intel, Microsoft and Nvidia. Motley Fool recommends the following options: Long January 2026. $ 395 calls Microsoft, short February 2025. $ 27 calls to Intel and short January 2026. $ 405 calls to Microsoft. Motley Fool has disclosure rules.
