AMD Set to Challenge Nvidia's Dominance Amid AI Market Surge

In several respects, Advanced Micro Devices (NASDAQ:AMD) faces a daunting yet exciting challenge—demonstrating to the market that it can successfully claim market share from industry leader Nvidia.

Investors have been increasingly optimistic about AMD, reflected in its stock price soaring nearly 50% since hitting a low roughly two months after Liberation Day. This newfound positivity offers a much-needed boost for investors, especially after AMD’s decline during the latter part of 2024 and the initial months of the current year.

This turnaround is buoyed by a series of favorable developments for the company, including an impressive Q1 2025 earnings report boasting record revenues of $7.4 billion and a formidable 54% in gross margins. Further sweetening the pot is a recently inked $10 billion partnership with Saudi Arabia’s HUMAIN.

A highly regarded investor known as Stone Fox Capital predicts that AMD could be in for more promising times—particularly as the AI revolution transitions from training to inference phases.

“The AI inference market is poised for a staggering 80% CAGR, building significant upside potential in a $500 billion AI accelerator market by 2028,” explains the 5-star investor, who ranks among the top 4% of TipRanks’ stock experts.

Stone Fox elaborates that AMD is strategically positioned for profitable growth in this burgeoning market. The investor suggests that if AMD secures even a modest 10% to 20% slice of the AI accelerator market, its data center revenues could skyrocket to between $50 and $100 billion by 2028.

“A critical aspect of AMD’s investment narrative is that it enters mid-2025 with relatively limited data center sales compared to the promising opportunities ahead,” Stone Fox says.

The investor highlights that AMD’s upcoming MI355x is launching at an opportune moment, presenting a significant advancement over the MI300x. Stone Fox points out that AMD has claimed the MI355x can generate up to 40% more tokens per dollar compared to Nvidia’s B200 GPU.

In summary, AMD’s future looks promising.

“AMD has the potential to become a powerhouse in the AI inference sector, making up for its lag in the AI training arena,” concludes Stone Fox, backing AMD with a Strong Buy rating.

Wall Street shares this enthusiasm for AMD’s future. With 22 Buy recommendations and 11 Holds, AMD holds a Moderate Buy consensus. Its average 12-month price target of $129.41 suggests an upside of approximately 11%.