Why AMD Stock Has Rallied 60%
INDONESIA - 2025/06/16: In this photo illustration, the AMD (Advanced Micro Devices) logo is seen ... More displayed on a smartphone screen. (Photo Illustration by Algi Febri Sugita/SOPA Images/LightRocket via Getty Images)
Advanced Micro Devices stock (NASDAQ:AMD) soared by over 8% in Monday's trading session. The increase follows several significant analyst upgrades for AMD stock and favorable insights from the company's Advancing AI event held last week. The stock has now appreciated by approximately 60% since April. What factors are fueling the surge in AMD stock?
During its AI day event, AMD introduced its MI350 series accelerators, which are set to launch in the latter half of this year. AMD claims that these chips will deliver four times the AI compute power compared to the previous generation. Additionally, the company provided an early look at next year's MI400/450 chips. AMD aims to enhance its position as a full-stack AI computing provider, positioning itself directly against Nvidia by expanding both hardware and software capabilities. The company has recently acquired Brium, a startup specializing in compiler and AI software optimization.
AMD has also acquired Enosemi, which works on silicon photonics and optical interconnects, technologies essential for faster and more efficient data transmission as AI models grow larger. These advancements could strengthen AMD's ROCm software stack. AMD's software framework for its AI tools is open-source and follows a standards-based model, in contrast to Nvidia's proprietary CUDA ecosystem. This advantage may offer the company a competitive edge by providing a flexible and cost-effective alternative to Nvidia's AI offerings.
On a separate note, see – QUBT Stock Is Up 80% In A Month. What's Happening With Quantum Computing?
Although AMD's GPUs still trail behind Nvidia's at the high end, the wider AI boom—driven by large models such as OpenAI's GPT-4o and China's highly efficient DeepSeek R1—has been boosting demand across the sector. Furthermore, enterprises are increasingly seeking to diversify their chip suppliers beyond Nvidia, potentially creating new opportunities for AMD. The company has gained momentum through new GPU and AI data center agreements, including a significant $10 billion partnership with Saudi-backed AI firm Humain, signed in May. Humain plans to purchase CPUs, GPUs, and software from AMD to establish data centers and AI infrastructure.
AMD also collaborates with seven of the ten largest AI model developers, including Meta, Microsoft, OpenAI, and xAI, as partners for training models. However, risks remain, especially as major cloud providers like Google and Amazon continue to invest in their own custom AI chips, which might hinder demand growth for third-party hardware over time. Refer to our analysis on AMD Valuation: Is AMD Stock Expensive Or Cheap? for further insights on AMD's valuation and its standing compared to peers.
The rise in AMD stock over the past four years has been inconsistent, with annual returns exhibiting considerable volatility compared to the S&P 500. Stock returns were 57% in 2021, -55% in 2022, 128% in 2023, and -18% in 2024. The Trefis High Quality (HQ) Portfolio, comprised of 30 stocks, is significantly less volatile and has outperformed the S&P 500 during the last four years. What's the reason? As a group, HQ Portfolio stocks have delivered superior returns with reduced risk compared to the benchmark index, showing less drastic fluctuations as illustrated in HQ Portfolio performance metrics.
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