Two Stocks That Look Undervalued: AMD
The boom of artificial intelligence (AI) ran a bit ahead, yet the recent price corrections of a too fast rally on chip stocks may give investors a chance to buy them cheaper. A smart purchase often follows the market crowd's blood tears.
For example, the recent estimate about AI chip availability by Microsoft CEO Kevin Scott he just shared during the Code Conference on September 27 was an improved access to NVIDIA AI chips compared to a few months ago. Yet, he also noted that demand was far exceeding the supply of GPU (graphic processing units) capacity that the whole ecosystem could produce. The situation is resolving, but it’s still tight, and that was a piece of news of one of the world's largest chip users and players on this market.
A Microsoft top manager did not confirm directly any rumours about his company’s work on proprietary AI-related chips with Advanced Micro Devices (AMD), just limited himself by saying that Microsoft is doing a bunch of interesting work with AMD to make increasingly compelling GPU offerings. Probably, we will get even more good news ahead on that front.
Meanwhile, Advanced Micro Devices CTO Mark Papermaster said later, at Mizuho Software Conference in early October, there is a growing interest in "open-source, hardware non-specific" AI architecture in the cloud and enterprise sectors, potential resolutions for data portability issues through software containers, increased software focus with a significant headcount increase, and the introduction of Siena, which is AMD's low-power roadmap with 64 cores designed for telco/edge and hyperscale applications. Buy rating for AI chip production leaders, including NVIDIA and AMD, looks justified, with at least a nearly $140-150 price target range for AMD, as its chips are seemingly ready for a massive market share capture with its MI300X chip model in 2024-2025. The current AMD stock price is just around $100, plus or minus $2, compared to almost $133 in the beginning of June, in the wake of the AI first hyping wave of 2023.
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