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In the past ten years of my life, some things have been constant.
First, I can’t seem to drink enough water to support my insanely hard workouts. Second, Nvidia (NVDA) stock price usually only goes up. Third, competitor AMD (AMD)’s stock price usually rises. And fourth, I don’t get enough sleep.
I’m happy to say that three of these constants remain constant in 2024.
Who didn’t? The stock price of former leader AMD ended the year down 17%. By comparison, Nvidia is up 171% in 2024, Broadcom (AVGO) is up 107%, and the Nasdaq Composite (^IXIC) is up 28%.
AMD was the ninth most popular stock (Nvidia was No. 1) held in individual investors’ portfolios last year, according to data from Vanda Research. The stock represents, on average, 2.07% of the average retail investor’s portfolio, down from 3.37% at the beginning of 2024.
AMD’s stock price performance is amazing if you ask me, given 1) the company’s impressive earnings growth; 2) Top-notch innovation and execution on the chip front, which AMD President and CEO Lisa Su reminded me of in a conversation in September; And 3) Intel (INTC) has collapsed (more on that here from Yahoo Finance’s Yasmin Khorram and Laura Bratton), allowing more land grab opportunities for AMD.
“It’s the view that AMD has lost out in the AI arms race behind Nvidia, and so far it’s been disappointing,” Dan Ives, a technology analyst at Wedbush, told me.
Ives makes a key point about AMD at this point. The stock is driven more by perception than actual fundamentals and expectations. To that end, here are three issues I now see with AMD sentiment.
Nvidia effect: The Street views Nvidia’s product pipeline — led by the new Blackwell chip now hitting the market — as one year ahead of AMD in terms of AI performance (something that may be on display in Nvidia CEO Jensen Huang’s keynote at CES next week ). This is seen as hampering AMD’s market share gain opportunities.
Cloud operator effect: Major cloud players are increasingly opting for custom chips from Marvell (MRVL) and Broadcom. For example, Amazon ( AMZN ) has strongly signaled its preference for custom chips from its Trainium and Marvell line or Nvidia products, noted Bank of America analyst Vivek Arya. Separately, Google ( GOOG ) continues to favor in-house chips and those from Broadcom and Nvidia.
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