hapabapa AMD ( NASDAQ: AMD ) has been a laggard compared to the broader Philadelphia Semiconductor Index ( SOX ) this year, despite consistent progress in ramping up its AI accelerators to support the industry’s transition to accelerated computing. The stock has largely traded rangebound in recent months, after paring earlier-year gains in March. In addition to regulatory barriers against AMD’s penetration into the Chinese market with its Instinct accelerators, the company is also grappling with intensifying competition amid the AI processor arms race.
Yet AMD’s data center segment continues to benefit from a robust demand environment, with growth remaining a function of supply availability. More importantly, its strong product slate, supported by the next-generation Turin server processors and MI325 accelerators coming 2H24, will likely bolster growth in the higher margin data center revenue stream. Meanwhile, emerging signs of recovery in its client segment are also expected to benefit from the upgrade cycle ahead.
Specifically, strong uptake for the Ryzen 8000 series CPUs observed in Q1 underpins similar demand for AMD’s next-generation AI-enabled processors to support AI PCs. The gradual recovery in embedded segment sales heading into 2H24 should also restore accretion to profit margins in 2025. Taken together, we believe AMD’s benefit from the emerging upgrade cycle across its key product segments remains underappreciated at the stock’s current levels.
The mo.
