Advanced Micro Devices (NASDAQ:AMD) stock had a bumpy week, but it is still up about 30% year to date, but the company is still chasing Nvidia (NASDAQ:NVDA). Indeed, AMD has been doing all the right things since the start of the year.
AMD’s surging chip demand has helped grow the company’s revenue grew 46% year-over-year. AMD stock has come down considerably from this year’s peak well above $200 per share. Here’s why I think AMD’s momentum could pick up once again, driving solid returns in 2024.
AMD Stock and the Crypto Mining Trend
Since 2020, many GPUs have been consistently increasing in price and demand, and most of these demands come from cryptocurrency miners.
One of the most prominent ones is Ethereum mining during the pandemic. Although such a trend has ended in 2022, other mining surges will still affect CPUs in 2024, notably AMD Ryzen processors.
Analysis suggests increased mining profitability because of Bitcoin’s record highs, leading to rising demand for PC hardware.
For instance, the AMD Ryzen 9 7950X has seen its price surge above its launch price, showing heightened demand likely driven by mining activities.
Monero and various Proof of Work coins utilize the RandomX algorithm, favoring high core count AMD chips according to XMRig benchmarks. The AMD Ryzen 7950X ranks 118th with a score of 26,783, surpassing the Intel Core i9 14900K at 211th with 16,278.
AMD’s Ryzen 7000-series CPUs excel in CPU mining algorithms, leveraging L3 cache and AVX instructions for efficiency.
As demand for CPU mining increases, AMD’s future Zen 5 models need more certainty against potential AVX-512 adoption by Intel’s competitors.
During the mining boom, there’s talk of AMD potentially launching low hash rate Zen 5 CPUs, akin to Nvidia’s LHR graphics cards. However, it’s still being determined if AMD will pursue this route.
With Bitcoin’s ascent and increased crypto investment, mining profitability rises, potentially affecting the availability of high core count Zen 5 CPUs. Time will reveal AMD’s strategy amid these developments.
Increase in Chip Output According to CEO
At SXSW, AMD CEO Dr. Lisa Su emphasized the company’s substantial investment in AI, revealing her personal use of AI for daily tasks. Speaking with podcaster Ryan Patel, Su highlighted AI’s widespread integration in various applications, foreseeing its omnipresence soon.
Su emphasized AI’s importance as the most significant technology in the past five decades. At AMD, AI is integral, enhancing chip design, productivity, and business operations.
Su aimed to leverage AI across AMD, from chip design to HR and customer service, ensuring responsible AI use by addressing biases in data training.
The CEO also urged against slowing down AI development in response to concerns, emphasizing the need for progress.
Responding to a question about GPU supply, Su assured an increase in AMD’s GPU production with confidence. She also mentioned utilizing Microsoft Copilot for meeting summaries and tracking action items.
AMD is Tough to Beat
Wall Street analysts foresee continued robust investment in data center infrastructure to support generative AI applications.
OpenAI’s ChatGPT set the trend in late 2022, yet Nvidia dominates with over 90% of the GPU market due to its comprehensive AI computing solutions.
In contrast, AMD and Intel focus on raw computational power with GPUs, offering value and performance without Nvidia’s entire software stack.
AMD aims for gradual market expansion and a significant share in the burgeoning AI chips market.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
