A Once-in-a-Decade Investment Opportunity: 1 Artificial Intelligence (AI) Chip Stock to Buy Hand Over Fist Right This Instant (Hint: It’s Not Nvidia)

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A Once-in-a-Decade Investment Opportunity: 1 Artificial Intelligence (AI) Chip Stock to Buy Hand Over Fist Right This Instant (Hint: It’s Not Nvidia)

Nvidia remains the top player in data center chips, but AMD is scaling up at an impressive pace.

Partnerships with the likes of Oracle,

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, and Meta Platforms should give it a big boost.

Despite the chipmaker’s encouraging progress, its shares still remain historically cheap.

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Semiconductor stocks have been some of the biggest winners of the artificial intelligence (AI) revolution. It makes a lot of sense, too. AI chips are the brains that power and train generative AI models, helping businesses build new products and services at warp speed — ushering in a new wave of productivity, efficiency, and automation.

For the most part, however, one name emerges more often than others in the chip realm. Obviously, I’m talking about Nvidia. I can’t deny that what Nvidia has achieved over the last two years isn’t impressive. Don’t get me wrong — I’m very happy to be an investor in Nvidia stock. But as a long-term investor, I’m always looking for opportunities beyond the mainstream.

Enter

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(NASDAQ: AMD). With a share price decline of 31% over the last year, AMD may not look like your cup of tea. However, I’d encourage you to keep an open mind. Let’s explore how AMD is making inroads in the AI chip landscape, and why now looks like a lucrative time to buy the stock hand over fist.

AMD reports its financials across three business segments: Data center, client and gaming, and embedded. The data center segment competes directly with Nvidia, and recent trends in this business unit have really caught my eye.

The table below breaks down AMD’s data center financial profile over the last year.  Over the past year, AMD has scaled its AI

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business considerably. All the while, operating profit margins have been expanding — signaling that AMD is able to fulfill demand and build its chip business in a profitable way.

Data Center Segment

Q1 2024

Q2 2024

Q3 2024

Q4 2024

Q1 2025

Revenue (in billions)

$2.3

$2.8

$3.5

$3.8

$3.7

Revenue growth (year over year)

80%

115%

122%

69%

57%

Operating income (in millions)

$541

$743

$1,000

$1,200

$932

Operating margin

23%

26%

29%

30%

25%

Data source: Investor Relations.

One thing to call out is that over the last six months, it may look like AMD’s chip business is beginning to show some signs slowing. I wouldn’t be caught up in that idea, though. First, the semiconductor industry tends to be cyclical. Moreover, Nvidia launched its newest graphics processing unit (GPU) architecture (Blackwell) during the fourth quarter, which likely served as some form of a headwind for AMD.

Story Continues

Nevertheless, AMD has nearly doubled its operating income in the chip business over the past year, while still accelerating sales by high double-digit percentages. Furthermore, the company is launching new architectures of its own later this year — and AMD’s CEO Lisa Su sounds quite confident that these products will be a big hit with customers.

Image source: Getty Images.

Perhaps the biggest reason I’m excited about AMD’s future is because of the company’s proven ability to win notable customers. For example,

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, Oracle, and Meta Platforms are all using AMD’s MI300 accelerators in addition to their respective Nvidia GPUs.

On top of that,

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— another Nvidia customer — recently made a strategic investment in AMD. This very well could signal partnership opportunities between AMD and

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’s thriving cloud infrastructure business.

Over the coming quarters, my

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is that AMD’s data center business will continue generating a combination of revenue growth and margin expansion, thanks to encouraging shipment trends for MI325, MI350, MI355, and MI400 series chipsets.

Right now, AMD’s forward price-to-earnings (P/E) multiple is hovering well below its 10-year average.

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data by

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It seems to me that investors are questioning AMD’s ability to capture rising AI infrastructure spend from the hyperscalers. What I find perplexing, however, is that AMD has already proven it can do this, but for some reason the company isn’t getting much credit for the growth in its data center business.

In my eyes, AMD is a no-brainer buying opportunity right now, and investors should consider taking advantage of the disparity in its current valuation multiples compared to historical trends. I think the stock is cheap based on forward earnings, and long-term investors should consider holding on to a position in AMD over the next several years.

Before you buy stock in Advanced Micro Devices, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 

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for investors to buy now… and Advanced Micro Devices wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when 

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 made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $639,271!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $804,688!*

Now, it’s worth noting Stock Advisor’s total average return is 957% — a market-crushing outperformance compared to 167% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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*Stock Advisor returns as of May 19, 2025

John Mackey, former CEO of Whole Foods Market, an

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subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for

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and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors.

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has positions in

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, Meta Platforms,

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, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices,

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, Meta Platforms,

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, Nvidia, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on

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and short January 2026 $405 calls on

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. The Motley Fool has a

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.

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was originally published by The Motley Fool

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#OnceinaDecade #Investment #Opportunity #Artificial #Intelligence #Chip #Stock #Buy #Hand #Fist #Instant #Hint #Nvidia

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