AMD & CEA Team Up to Boost AI Computing: Buy or Hold AMD Stock?

Advanced Micro Devices AMD is collaborating with France’s Commissariat à l'énergie atomique et aux énergies alternatives (CEA) to boost AI computing. The partnership aims to develop energy-efficient systems to support compute-intensive workloads across varied domains.AMD is playing catch-up against NVIDIA NVDA in the cloud-data center and AI chip markets with its portfolio of fifth-gen EPYC Turin, fourth-gen and third-gen EPYC processors as well as Instinct accelerators and ROCm software suite. An expanding partner and client base that includes Amazon, Alibaba, Google, Microsoft MSFT, Meta Platforms META, Dell Technologies and Tencent has been playing a key part in expanding AMD’s footprint. CEA is a notable addition in this regard.In 2024, AMD’s Data Center revenues accounted for roughly 50% of annual revenues and jumped 69% year over year to $3.9 billion. AMD exited the year with almost 50% share at the majority of its largest hyperscale customers. EPYC instances increased 27% in 2024 to more than 1000, with hyperscalers like Amazon Web Services, Alibaba, Google, Microsoft and Tencent launching more than 100 general-purpose AI instances in the fourth quarter of 2024 alone.Can Expanding AI Footprint Help AMD Shares Recover in 2025?Despite a strong portfolio and an expanding partner as well as clientele AMD has been suffering from stiff competition particularly from NVIDIA. Growing demand for custom AI chips offered by the likes of Broadcom is increasing concern over market share. Moreover, weakness in the Embedded and Gaming segment has been a headwind.AMD shares have lost 37.8% in the trailing 12-month period, underperforming the Zacks Computer and Technology sector’s return of 21.8% and the Zacks Computer – Integrated Systems industry’s decline of 2.9%. NVIDIA shares have appreciated 79.7% over the same timeframe.AMD Stock’s Performance Image Source: Zacks Investment Research AMD delivered more than $5 billion in data center AI revenues in 2024, driven by deployments of MI300X by Meta Platforms and Microsoft. While META used MI300X to power its Llama 405B frontier model on meta.ai, MSFT used it to power multiple GPT 4-based Copilot services. AMD Instinct accelerators saw strong demand from a dozen cloud service providers, including IBM and Digital Ocean. AMD expects this number to grow in 2025.AMD’s MI325X is currently under production. Its next-generation MI350 series, based on CDNA 4 architecture, promises a 35 times increase in AI compute performance compared with CDNA 3. The company plans to ship samples to lead customers in the current quarter and is on track to accelerate production shipments to mid-year. Development of the MI400 series is also progressing well and remains on track to launch in 2026.Can Acquisitions Boost AMD’s AI Prospects in 2025?AMD has been on an acquisitive spree to strengthen its AI ecosystem and bridge the technological gap with NVIDIA in the race for AI dominance. The acquisition of ZT Systems, which provides AI infrastructure to large hyperscale computing companies, is noteworthy. ZT Systems will enable AMD to simultaneously design and validate its next-generation AI silicon and systems. The move is expected to speed up the large-scale deployment of data center accelerators, critical for AI innovation.The acquisition of Helsinki-based Silo AI further enhances AMD’s AI development capabilities. Nod.ai and Mipsology are some other notable acquisitions in the recent past.AMD’s 2025 Earnings Estimates Trend DownwardThe Zacks Consensus Estimate for AMD’s 2025 earnings is currently pegged at $4.60 per share, down by 5.7% over the past 30 days, indicating year-over-year growth of 38.97%.The consensus mark for 2025 revenues is pegged at $31.87 billion, indicating year-over-year growth of 23.62%. AMD beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 2.32%. Advanced Micro Devices, Inc. Price and Consensus Advanced Micro Devices, Inc. price-consensus-chart | Advanced Micro Devices, Inc. Quote Find the latest EPS estimates and surprises on Zacks Earnings Calendar.AMD Stock OvervaluedAMD stock is currently overvalued, as the Value Score of D suggests a stretched valuation at this moment.The stock is trading at a premium with a forward 12-month Price/Sales of 5.54X compared with the industry’s 3.26X.Price/Sales Ratio (F12M) Image Source: Zacks Investment Research What Should Investors Do With AMD Stock?AMD’s expanding portfolio and strategic acquisitions are expected to improve its top-line growth. However, its near-term prospects are dull, given the weakness in the Gaming and Embedded segment and stiff competition from NVIDIA in the Data Center space. Stretched valuation is a concern. The stock is trading below the 50-day and 200-day moving averages, indicating a bearish trend.AMD Stock Trading Below 50-Day & 200-Day SMA Image Source: Zacks Investment Research AMD currently has a Zacks Rank #3 (Hold), suggesting that it may be wise for investors to wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Meta Platforms, Inc. (META): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks