Is AMD worth $300 billion?

$Advanced Micro Devices(AMD)$ 's stock price surged 9% yesterday, hitting a record high, and its market capitalization broke through $300 billion to reach $311.1 billion!

$Dell Technologies Inc.(DELL)$ released its financial report yesterday, and Chief Operating Officer Jeff Clarke said that the demand for the company's AI servers, including $NVIDIA Corp(NVDA)$ 's H200 and AMD's MI300, is strong.

At the same time, multiple investment banks have raised their target prices for Nvidia and AMD.

Nvidia is the undisputed leader in GPU, followed closely by AMD.

Due to the booming demand for AI, Nvidia's GPUs are in short supply, and its performance has skyrocketed, driving the company's market capitalization to exceed $2 trillion!

Although Nvidia is undefeated, its big customers, such as $Microsoft(MSFT)$ and $Amazon.com(AMZN)$, do not want to rely too much on Nvidia's GPUs. Therefore, once AMD's MI300 is launched, it is expected to receive huge orders.

Previously, AMD estimated that MI300 would generate $2 billion in revenue this year, but under the skyrocketing demand, it has been raised to $3.5 billion!

AI GPUs are still facing production capacity bottlenecks, and Nvidia stated in its latest quarterly financial report that it has not yet seen a decline in AI demand, and the boom will continue until 2025.

Currently, 40% of GPUs are used for training large models. In the future, once the application side begins to explode, the demand will be massive. For example, OpenAI's recently released Sora has shown the world the potential of AI.

In this AI feast, AMD is certain to eat a big chunk. Although its current market capitalization has reached $311.1 billion, and its price-to-sales ratio is also close to the peak during the semiconductor bull market in 2021, compared to Nvidia's dynamic 20x price-to-sales ratio valuation, AMD still has room for growth:

Don't forget, AMD is a rising star in AI, and its revenue has not yet exploded. Considering the growth of future earnings, the current valuation is not expensive!

In addition to MI300, AMD's tailwind this year also includes the recovery of the PC market. Dell stated in its latest financial report that the PC market will recover in the second half of this year:

Looking ahead to 2025, AI PCs are expected to explode. From $Samsung Electronics Co., Ltd.(SSNLF)$ 's latest AI phone, the Galaxy S24, which supports real-time voice translation and amazing photo enhancement capabilities, it is expected that AI will stimulate a wave of phone replacements!

AI PCs will be intensively launched in the second half of this year, and are expected to contribute significant sales in 2025, with AMD benefiting greatly.

From a technical perspective, AMD has broken through the horizontal trading range with a large volume candlestick, indicating that it is poised for another round of gains:

$300 billion is definitely not AMD's peak moment!