Cathie Wood Engages in Budget Shopping: One Artificial Intelligence-Focused Semiconductor Company She Recently Purchased (It's Not Nvidia)
Cathie Wood, known for her high-conviction investments, has taken a liking to chip giant Advanced Micro Devices (AMD). Over the last three months, her firm, ARK Invest, has been pouring money into AMD stocks across four of its exchange-traded funds.
AMD's Resurgence
Starting in October, ARK Invest began investing in AMD. Over the course of three months, the firm added 122,279 shares in October, 156,637 in November, and another 156,561 in December. This significant investment shows Wood's bullish stance on AMD's future growth.
However, AMD's share prices have dipped by approximately 21% since October, presenting an opportunity to buy the stock at a discounted price.
Reasons to Bet on AMD
Investors might be hesitant about AMD given its competition with market leader Nvidia and the latter's 90% market share in the data center GPU market. But AMD isn't outnumbered just yet.
AMD shares bought
AMD's recent innovations have seen it secure a 10% share of the data center GPU market. Its MI300 accelerator chip counts top tech firms like Microsoft, Oracle, and Meta Platforms as customers, which has significantly contributed to its growing data center GPU business. In fact, AMD's data center business is currently expanding at a similar rate to Nvidia's, signaling intense competition but also increasing momentum.
122,279
Valuation and Growth Opportunities
156,637
AMD's recent dip in share prices has led to a significant reduction in its valuation. The company's forward P/E multiple now matches that of the S&P 500, making it an attractive investment opportunity with commensurate growth potential.
156,561
Given AMD's dominance in the AI chip sector and its strategic positioning, the poor market sentiment towards its stock is puzzling. With substantial growth potential, it's no wonder that Cathie Wood is increasing her investment in AMD.
Enrichment Insights:
- AMD's AI Capabilities: Strategic acquisitions such as Finnish AI startup Silo AI and ZT Systems have significantly boosted AMD's AI capabilities.
- Market Valuation: AMD's market cap has surpassed $300 billion, reflecting robust investor confidence.
- Competitive Pricing and Performance: Analysts such as UBS have highlighted AMD's competitive pricing and performance to that of Nvidia in AI chips.
- Visionary Leadership: AMD's CEO, Lisa Su, has been instrumental in the company's turnaround, focusing on product redesign, customer relations, and capitalizing on AI's boom.
- Future Prospects: AMD's plans for new product launches and anticipated customer adoption beyond current partners are expected to further enhance its position in the semiconductor market.
In light of AMD's significant share purchases by ARK Invest under Cathie Wood, who sees potential for the company's future growth, some investors might consider this as a prime opportunity for finance-driven individuals to explore investing in AMD stocks, potentially capitalizing on the current dip in prices. Furthermore, the company's increased presence in the data center GPU market, primarily due to its AI-focused innovations and prominent partnerships, strengthens its appeal as an attractive investing proposition in the finance sector.