Summary: ARM Holdings and AMD are both contenders in the AI chip market, with AMD being more attractive. Analysis: Positive. Since AMD is considered the more attractive buy in the AI chip market compared to ARM Holdings, this news is positive for AMD.
From NASDAQ.:
The demand for specialized semiconductors for Artificial Intelligence (AI) applications continues to drive the stock market in 2024. Companies like Nvidia have seen exponential growth, but investors are also eyeing opportunities in ARM Holdings and Advanced Micro Devices (AMD) as potential contenders in the AI chip market, with ARM having a market cap of $133 billion and AMD projecting over $2 billion in AI chip sales in 2024.
ARM Holdings is a leading semiconductor and software design company that has seen exceptional performance in 2024, with revenue reaching $824 million for the third quarter of fiscal year 2024 and a YTD gain of 72%. The stock has a forward price/sales ratio of 41.87 and a PEG ratio of 2.06, with analyst ratings generally positive. ARM has already exceeded its mean price target of $92.53, indicating strong performance and high investor interest.
Advanced Micro Devices (AMD) is known for its high-performance computing and graphics solutions, with a focus on AI and machine learning. In 2024, AMD stock has gained 37.5%, fueled by strong Q4 results and a projection of over $2 billion in AI chip sales. The company unveiled the Instinct MI300 Series accelerator family to challenge Nvidia’s dominance in the AI chip market, garnering positive analyst sentiment and a “strong buy” consensus.
In the battle of AI chip stocks, AMD emerges as the more attractive buy, with a more reasonable valuation compared to ARM Holdings and a strong foothold in the AI chip market. While ARM’s innovative chip architecture is well-positioned for the AI era, concerns about its high valuation raise questions about sustainability. Investors seeking exposure to the AI chip market may find AMD to be the better choice for potential outperformance in the near term.
Read more at NASDAQ.: ARM vs. AMD: Which AI Chip Stock is a Better Buy?