Better Artificial Intelligence Stock: AMD vs. Marvell Technology

By Investor Empires On Dec 15, 2024

Advanced micro devices (NASDAQ:AMD) and Marvell technology (NASDAQ: MRVL) Contrasting fortunes were enjoyed in the stock market in 2024, with one of these names posting stellar gains while the other was in the red.

More specifically, AMD stock’s 13% decline this year pales in comparison to the staggering 76% rise in Marvell stock. Both companies are tapping into growing demand for chips to power artificial intelligence (AI). Will Marvel still be the best? Artificial Intelligence Stocks From Monday in 2025 too? Or can AMD turn its fortunes around in the new year and outperform Marvell?

Let’s find out.

AMD He played second fiddle to Nvidia In the market for graphics processing units (GPUs) for the AI data center. However, the company’s data center business is growing at an impressive pace.

In Q3 2024, for example, AMD’s data center revenue increased 122% year over year to reach a record level of $3.5 billion.

Management says this impressive growth was driven by strong demand for data center GPUs and CPUs. The company now expects to end the year with $5 billion in data center GPU revenue, which would be a huge improvement from the $400 million in revenue it generated from sales of these chips in the fourth quarter of 2023.

Furthermore, the company continued to increase its data center GPU guidance throughout the year, starting at $2 billion at the beginning of the year.

AMD is seeing success in other related areas as well, such as AI-enabled personal computers. This explains why the company’s revenue from its customer segment, which includes sales of CPUs used in desktop and laptop computers, increased by a staggering 29% year over year in the third quarter to reach $1.9 billion. Together, these two segments produced 80% of AMD’s total third-quarter profits, and their strong growth has allowed the company to offset weakness in other areas such as gaming and embedded chips.

The company’s total revenue rose 18% from the same quarter last year to $6.8 billion, while adjusted earnings rose 31% to $0.92 per share. AMD’s guidance for the current quarter is also strong. The company expects its year-over-year net profit growth to accelerate to 22% in the fourth quarter. Analysts expect AMD to exit 2024 with a 13% increase in revenue to $25.6 billion, along with a 25% jump in earnings to $3.32 per share.

However, next year will be much stronger for AMD according to consensus forecasts. Its revenues are expected to jump by approximately 27%, while profits are expected to increase by 54%.

It’s easy to see why analysts expect AMD’s growth to accelerate significantly next year. First, shipments of AI-powered personal computers are expected to increase 165% in 2025, according to Gartner. This would be a significant improvement over the 100% growth expected for 2024.

AMD is well-positioned to capitalize on this market’s growth, according to its third-quarter earnings call, where it said PC makers like HP and Lenovo are “on track to more than triple the number of Ryzen AI Pro platforms they offer in 2024.” We expect to have more than 100 commercial Ryzen AI Pro rigs on the market next year.”

Meanwhile, AMD could also benefit from an improvement in the production of AI-powered GPUs by its foundry partner. TSMC in 2025. The Taiwan-based foundry giant is expected to double in 2025, and is also expected to use its Arizona factory to make AMD’s upcoming AI accelerators. Therefore, there is a good chance that the company’s stock market fortunes will change in 2025 thanks to AI.

Marvell Technology is a major player in the AI-focused application-specific integrated circuits (ASICs) market, a space that is growing at an astonishing pace. Demand for Marvell optical equipment is also growing well to enable faster connections within and between data centers. These motivators are why the data center business has grown incredibly well recently.

The chipmaker’s data center revenue rose 98% year over year in the third quarter of fiscal 2025 (which ended November 2) to $1.1 billion. The striking thing to note here is that the data center segment generated 73% of Marvell’s revenue last quarter, compared to just 39% in the same period last year. The company’s data center growth was so good that it was enough to boost Marvell’s total revenue 7% year over year despite sharp double-digit declines in its other four segments.

Management says demand for its AI chips is so strong that it is on track to beat full-year AI revenue guidance of $1.5 billion by a significant margin. Marvell expects $2.5 billion in the next fiscal year.

However, there is a good chance that the chipmaker will be able to generate higher AI revenues next year as well, given that it has expanded its partnerships with major cloud computing providers such as Amazon And it brought an additional client on board.

These catalysts are expected to be so strong that analysts are forecasting a 41% jump in net profit next year to $8.1 billion, along with 77% growth in net profit to $2.76 per share. By comparison, the company’s revenue is expected to rise just 4% in the current fiscal year to $1.56 per share, along with a 3% increase in earnings per share.

MRVL revenue estimates for next fiscal year; Data by YCharts.

Therefore, there is a strong possibility that Marvell stock will maintain its significant rally in 2025 as well.

We have seen that both AMD and Marvell are expected to grow impressively in the coming year. Marvell is expected to grow faster than AMD, but there are several reasons why the latter might be a better choice for AI.

First, AMD is cheaper. The stock’s sales and forward earnings multiples make it the cheapest stock right now when compared to Marvell.

AMD PE Ratio Chart (Forward). — AMD PE Ratio (Forward), Data by YCharts; PS = Price to Sales. PE = price to earnings.

Second, AMD is the most diversified AI stock. The company supplies central processing units (CPUs) and graphics processing units (GPUs) not only for data centers but also for personal computers, suggesting that it may have a larger AI market to address than Marvell.

Therefore, investors looking for AI stocks that can offer a mix of value and growth may be inclined to buy AMD instead of Marvell despite the previous poor stock market performance this year.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Harsh Chauhan He has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Gartner and Marvell Technology. The Motley Fool has Disclosure policy.

Top AI Stocks: AMD Technology vs. Marvell Technology Originally published by The Motley Fool