"Over the next decade, you'll surely want to own at least one artificial intelligence (AI) chip stock. You might assume that all you need is NVIDIA ( NASDAQ:NVDA) stock and nothing else. However, even though NVIDIA is the market's darling, your best pick could actually be Advanced Micro Devices ( NASDAQ:AMD) stock. Even though it's a giant company, Advanced Micro Devices is an underdog in some respects."
"One possible deal-breaker for income investors is that AMD stock doesn't pay a dividend. Consequently, you'll need the share price to rise in order to make a profit. Meanwhile, value investors might take issue with Advanced Micro Devices' valuation. Specifically, the company has a trailing 12-month price-to-earnings (P/E) ratio of around 113x. In addition, AMD stock is already up 135% over the past five years."
"Those are valid objections, but to be fair, Advanced Micro Devices stock just pulled back nearly 20% from $167. Since the stock has a good track record of recovering from drawdowns, there appears to be a dip-buying opportunity here. Besides, if Advanced Micro Devices is a robust revenue and earnings grower, then the high P/E ratio don't have to be a deal-breaker. With that in mind, let's perform a thorough checkup on Advanced Micro Devices' financial health."
Advanced Micro Devices (AMD) is a major chipmaker positioned for AI-driven demand while remaining an underdog versus top mega-cap peers. AMD does not pay a dividend, so investor returns depend on share-price appreciation. The company has a high trailing 12-month P/E of about 113x and the stock rose roughly 135% over the past five years. AMD recently pulled back nearly 20% from $167, and its history of recovering from drawdowns suggests a potential dip-buying opportunity. Strong revenue and earnings growth could justify the valuation, warranting a detailed financial checkup before long-term investing.
Read at 24/7 Wall St.
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