From Nasdaq: 2024-08-05 06:20:00

Alphabet (NASDAQ: GOOG) and Advanced Micro Devices (NASDAQ: AMD) are both involved in the AI market. Alphabet’s Google is expanding its AI ecosystem and uses AI algorithms for ads. AMD is ramping up production of AI-focused data center chips, offsetting slow growth in other segments. Alphabet’s stock increased by 27% in the past three years, while AMD’s rose by 36%, outperforming the S&P 500. Analysts project 13% revenue growth for Alphabet and 28% for AMD in 2025.

Alphabet’s growth has slowed in 2022 and 2023 due to macroeconomic headwinds and increasing competition in the advertising industry. YouTube’s ad sales have weakened, making it challenging for Google to expand its AI market influence. Meanwhile, AMD’s revenue surged in 2021 and 2022, with a slight decline in 2023 due to market cooling. However, the company’s data center chip business, which includes Epyc CPUs and Instinct GPUs, has been flourishing.

AMD’s revenue is expected to rise by 13% and adjusted EPS by 29% for the full year. Analysts predict a promising outlook for 2025 with a projected 28% revenue growth and 59% EPS growth. However, the stock is trading at 42 times forward earnings, presenting a premium valuation compared to competitor Nvidia. Despite this, AMD’s focus on expanding its high-growth businesses like Instinct, Epyc, and Ryzen could support its valuation. As such, AMD may continue to be a preferred investment choice over Alphabet in the AI market.

The Motley Fool has identified 10 top stocks for investors to consider, with Advanced Micro Devices not making the list. Historically, the Stock Advisor service has significantly outperformed the S&P 500 since 2002. While AMD stock may seem expensive compared to Alphabet, the company faces fewer headwinds and is positioning itself as a significant player in the data center GPU market. This could lead to potential growth opportunities as investors seek alternatives to market leaders like Nvidia in the AI space.



Read more at Nasdaq: Better Artificial Intelligence Stock: Alphabet vs. AMD