The excitement surrounding AI is the dominant narrative driving the markets in 2024 — but it would appear that a rising tide does not lift all boats — at least not equally.
Advanced Micro Devices (NASDAQ: AMD) hasn’t benefited nearly as much from the hype as some of its competitors and peers.
The company’s ‘Advancing AI 2024’ event brought renewed interest on account of a promising line of products, the excitement proved to be temporary — even worse, even though the company’s Q3 2024 earnings call on October 29 showed promising metrics, the stock crashed in short order.
Picks for you
At press time, AMD stock was trading at $139.67 — with the exception of a small rally before the earnings report, it has been on a downward trajectory for a month. In the last 30 days, AMD shares have lost 11.55% in value — bringing year-to-date (YTD) returns down to a measly 0.78%.
There might be a silver lining up ahead, however — the semiconductor company’s main competitor, stock market darling Nvidia (NASDAQ: NVDA) will release its Q3 2025 earnings report after the close of the bell on November 20.
If AMD’s main rival posts strong results, some speculate that it could cause an AI gold rush in which the company would stand to benefit as a sympathy play.
Will undervalued AMD stock benefit from an Nvidia earnings beat?
In many ways, the premier semiconductor company sets the tone and expectations for the wider industry. This isn’t an unreasonable assumption — with a majority of the market share under its thumb, Nvidia can serve as a reliable barometer for AI stocks.
It would stand to reason that the business would benefit from the strong demand signals that an Nvidia earnings beat would provide — but there are a couple of issues.
Whereas Nvidia has concentrated on AI-related products for years, AMD continues to maintain a more diverse product line. This poses two issues — it dilutes the AI-specific appeal of AMD shares, while also preventing the company from going all in on the cutting-edge R&D necessary to secure a greater market share.
Market sentiment will also play a role — NVDA stock is one of the best performers of 2024, with YTD returns currently at 207.08%. It has an unparalleled record when it comes to securing AI revenue, and investor confidence is high — while the same cannot be said for AMD.
Ultimately, although it is still a potentially lucrative opportunity at a reasonable valuation, particularly as the company’s benchmarks stack up well against Nvidia’s, the Lisa Su-led business will have to unlock shareholder value on its own merits, not on those of its competition.
Featured image via Shutterstock
