From Nasdaq:

Shares in Advanced Micro Devices (NASDAQ: AMD) have seen a 130% increase year over year, driven by the growth of artificial intelligence (AI). The launch of OpenAI’s ChatGPT in 2022 caused many chip stocks to soar as AMD plans to begin shipping a new AI chip this year.

However, AMD’s earnings have not reflected its heavy investment, with a pricey forward P/E of 45 and a 47% drop in free cash flow. Consequently, it might be riskier to invest in AMD than other AI stocks at a better value or in better financial standing.

AMD’s second-highest forward P/E reflects that its stock has less value compared to other companies. This makes alternative stocks worth considering while waiting for AMD’s shares to become more attractive.

Although AMD seems risky, Microsoft’s investment in AI has caused its stock to rise 64% year over year, overtaking Apple’s market cap. It has shown no signs of slowing down and could have a stellar 2024 due to its significant free cash flow and lower forward P/E than AMD.

On the other hand, Intel’s shares are down nearly 13% since mid-January due to weak guidance despite strong revenue growth. However, the chipmaker is heavily investing in AI and restructuring to prioritize GPU production and profit growth, which could offer significant gains over the long term.

In a year where AI continues to show promise, investing in Microsoft and Intel seems preferable to AMD’s riskier standing and higher P/E, offering strong potential for growth and value for investors.



Read more: Forget AMD in 2024: 2 AI Stocks to Buy Instead