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It looks like this market is in the early stage of a complete reversal. Another 10% spike is boosting AMD's already upward climb. The company really is gaining traction with AI, but is it enough to truly compete with the leader in this field? Nvidia's business has grown in ways that are really unescribable.
Market Beats Thomas Hughes is a big fan of both companies, but he'll share why right now he believes AMD is the better choice. AMD has more ground to recover. Not to mention upcoming product upgrades. Just how high could this rising star climb yet this year? Let's dive in. Thomas, so great to have you back today talking about AMD and that 10% spike yesterday.
Uh AMD is really having a great week so far. What's behind this jump in the stock? Well, this is part of the story that we've been talking about for the last couple of months and quarters with this company. Um, so last year, year before last, there was certainly the AI bubble that formed for AMD when there was the expectations of what AI is going to bring for this company.
Those hopes didn't play out over the last year. So, the market corrected, normalized. But what we have have happening this year is the AI story has caught up to the market. The stock was trading down at a significant um support area. We've got a rebound now in play because the results are showing uh the impacts of AI, accelerating data center revenues.
In addition to normalizing end markets and the legacy businesses, the company's growing, it's accelerating, it's lifting its guidance. It's been making a lot of acquisitions to help bolster its AI appeal to its in markets and all this is being reflected in the price action. Again, 10% jump in one day is pretty good price action for a company of this size.
You'd think there'd be something more than just overall excitement over AI to help boost the stock 10% in just one day. Well, right, this is a culmination of factors. There is a lot of excitement about AI. Um, there is proof in the results and that's being also reflected in the analyst sentiment. So there's been a quite a few analyst upgrades and price target increases over the last few weeks that have ended a trend that was in place for the last you know 12 18 months and that was generally positive sentiment but uh price target reductions and that helped pressure the price lower.
Now what we have are the analysts reverting back to price target increases that's being compounded by upgrades and at the same time uh the market yesterday was trading right at this cluster of moving averages. So, what we see is support at these moving averages that's confirming not only short-term traders, but midterm and long-term traders are all kind of on the same page with this stock.
They all see it moving higher from here. Uh, so that's saying like the market's in alignment. It's really a very bullish signal, I think. And I think the whole tech sector saw a nice boost this week. Uh, the sector in general seems to be doing really well. I think what makes it so interesting is how not well it was doing just a couple of months ago.
If you look at AMD's in particular, it was one of the hardest hit stocks during those April tariff dips that we saw. The stock was down below $70 at one point, I believe. And now it's not quite doubled, but almost there in just the span of a couple of months. It's been quite a roller coaster year for this company.
It has been indeed. And that's just the the story that we've been talking about. It was a lot of expectations for AI were built into the stock price. Those expectations uh were not met over the course of the past year. stock prices corrected. The analyst sentiment certainly played a part in the correction.
But now what we see is um the company really is gaining traction with AI. It's really actually driving business. It's driving revenue growth. It's driving margins. It's driving cash flow. Those are all great things for the business. All tailwinds for the stock price. All things for the analyst to be noticing.
All things for them to be talking about to their own clients and reflected again in their their upgrades and their price target increases. Yeah, that's a lot of factors that truly make AMD a growth stock to watch right now. If you're looking for other growth stocks in this market, make sure to check out our latest premium article.
It's a list of four stocks with major growth potential this summer. You can scan the QR code right now or click the link in the description of this video to get that list for free right now. It's a new program just for our YouTube viewers. So, make sure to take advantage of that. Now, let's get into the specifics now of what AMD has going for it as a company.
I know there's the the age old debate of is AMD actually going to be a strong competitor for Nvidia or will Nvidia just continue to dominate this market. All right. So, um AMD actually offer some advantages to its end users. Um I think Nvidia remains the leader in far as far as raw compute power goes.
Uh but AMD's chips offer some dollar cost efficiency. The interface is a little bit more userfriendly. It has better compatibility with a wider range of thirdparty products. Um you get a little bit better performance per watt depending on the workloads and it absolutely has better memory which makes it a better choice for large language models and those more advanced um AI applications.
So within that what AMD has been doing um the advantage that Nvidia had was its first mover advantage. It's lean into its stack. It's been developing its front and back end for over a decade. AMD was behind on that. They've been working real hard to develop their stack and that's been seen in acquisitions and in their own activities and that's really making it an easier choice for other businesses to come in and want to use their products to build their GPU data centers.
I know we're talking about the future strength in AMD, but I don't want to talk about this chipmaker without also talking about your thoughts on Nvidia because I know you're very bullish on Nvidia as well. Uh let's talk about what's happening in that stock too. At the same time, AMD is seeing this really big runup.
Well, Nvidia is really the same story. Um, except it's the first mover. You know, it's it's had the first mover advantage. It's got all the data center money or the most of the data center money has been flowing towards it. There's been some fears of it slowing growth, but uh the latest news suggests that the growth will not be slowing at all anytime soon.
Well, I mean, it is slowing because the law of large numbers, but the gains are still very large. So, we're slowing from like 80% to 70% to 60%. But this is on top of triple digit gains last year. Each quarter when it grows by that 60% pace, it's increasing its size by a larger amount than the business's size was before a AI came into the picture.
It's just ridiculous how much growth there is here. Um, but it's still unfolding and that's that's driving analyst sentiment. They're lifting their price targets. They're pointing to new highs for this stock. Um, to me that's very significant because when the market breaks out to a new high, it will be confirming an uptrend, confirming the break of a trading range, which brings in some pretty significant technical targets.
So, we're looking at a 35 to 50% upside for Nvidia still. And that's um assuming that there's no um no more outperformance, there's no more good news, and I think that there will still be some good news. Do you think that these two companies will continue to rise and fall together um based on what's happening in the market and market sentiment towards AI or are there things that really differentiate these two stocks that could have them moving in their own stories?
I think that generally speaking they will rise and fall together with the data center and the AI story but within that I think that AMD will slowly catch up with Nvidia over time because the opportunity for it is to start uh retaking share. Nvidia absolutely has the most share because of its advantage, but AMD is well positioned to gain share.
It's working on doing that. It's just a matter of time for it to to gain the contracts, which it's doing now, uh just to to build out its network and to have a larger share. Now, let's talk about market cap. When we talk about buildout, Nvidia's up to the trillions in value while AMD is still around that $200 billion market cap.
What will it take to kind of fill that gap between these two companies? or is it is AMD really not going to be able to quite catch up? It'll take time for sure because AMD's business will have to grow the way that Nvidia's has. Nvidia's business has grown in ways that are really unescribable. I mean, it it doubled in size like sequentially for quarters on end and then year-over-year.
So, it's just AMD hasn't experienced that kind of growth. So, it'll it'll take another catalyst for it to really catch up to Nvidia. I think over time that's possible, but that will be a long-term play for really long-term um oriented investors. Let's talk about investors who are interested in AMD right now.
I know when the market was down, we did a video where you were encouraging people to get into AMD even though it was on that downward trend. And if you got in then you're doing pretty well right now. What are we seeing some uh retail investors doing in the market right now? Are they holding strong to AMD?
Are some taking profits as the stock rises? Or are there a lot more profits yet to come? Well, it looks like this market is in the early stage of a complete reversal. So, we've hit a bottom. We've rebounded. We've confirmed the reversal pattern now with the market confirming support above these moving averages.
I would say based on this chart that AMD stock could rise up into the 180 region, 180 to 200 region, possibly by the end of the year. That's a really quick turnaround. Again, if you got in at the right time on this stock, you are making quite a a profit on this company this year. Are there any other catalysts coming up for AMD?
new product launches, anything else happening that could really send this year soaring even higher? Oh, of course, the acquisitions, incorporating them into their into their business, the impacts that those will do on their go-to market strategy, not to mention upcoming product upgrades. The thing about chips and technology is there's going to be a persistent upgrade cycle.
And the way it's looking right now is that each time we get an upgrade, there's going to be um a little bit of outperformance relative to Nvidia. So, there's going to be that competition. Um, Nvidia will be first for a while, then AMD, and it'll go back and forth, and that will help drive both companies, I think, over time.
I don't want to finish up this video without talking about the potential risks. You know, tariffs are still a little bit in that uncertainty phase where we don't know the strong future of these yet, and that had impacted the chipmakers like AMD to begin with. So, is that threat still there? Are there other factors that could potentially have a more negative impact on AMD yet this year?
I mean there are of course the macroeconomic factors could impact the business but the way that things look right now um spending on tech by business is strong. It's flowing towards AI. This isn't about things that they can sell to other people. It's money that they need to spend on their own operations to keep up and stay relevant.
So I I don't see it ending anytime soon. So there are still some risks ahead for this company like many in the market this year. But let's talk about all of the action happening right now on AMD. There seems to be a lot of volume and a lot of interest in this stock right now. Right. There is volume.
I would say that it's partially retail interest, but it's also institutional and short sellers. Uh the institutions own quite a bit of this stock. So, they're an important factor to watch. They were selling earlier in the year, but they've reverted to buying in Q2. So, that provides um reduces a headwind, provides a tailwind, helps the rebound.
And then the short sellers uh the short interest is not very high about 2 and a.5% but they're they're covering they're they're they're reducing their their their exposure which also reduces a headwind and provides a tailwind in the form of them covering their positions. So uh with these trends in play I would say that the stock rebound looks pretty solid and I would really expect to see it continue to move higher as the year progresses.
Uh if you could buy just one whether it's Nvidia or AMD which would you be buying right now Thomas? Um, that's a tough one, but I think right now AMD, because it's still earlier in the rebound, um, Nvidia has already staged a pretty significant rebound, is on the cusp of setting new highs. Very bullish for that market, but I think AMD has more ground to recover before it breaks out and then continuing that trend from there.
Very interesting. Well, Thomas, thank you so much for diving into both of these companies today and especially going through that big spike in AMD this week. Let us know what you think. Are you looking at AMD right now? Did you happen to get in in April when AMD was down at some of its historic lows?
I'd love to hear from you in the comments. Thanks for joining us everyone and as always, happy investing.
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