Prediction AMD Will Soar Over the Next 5 Years. Here's 1 Reason Why.

In the current environment, it seems antithetical to say anything positive about Advanced Micro Devices (NASDAQ: AMD). The semiconductor stock has lost more than 60% of its value over the last 13 months as industry struggles and tariff-related worries have weighed on the company.

However, the investment case for AMD stock looks completely different, and given its advancements in one part of the chip industry, the stock could be in the perfect position to prosper over the next five years.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Where AMD can excel

Despite tariff-related worries and Nvidia's market lead, it could be AMD's time to succeed with artificial intelligence (AI).

Indeed, AMD and its peers face uncertainty as the U.S. government works to cut off China's GPU supply. The company revealed in an SEC filing that it might face charges of up to $800 million related to that policy change.

Nonetheless, investors should remember that the data center segment, which includes AI accelerators, generated $12.6 billion in revenue. That was a 94% yearly increase, and it is nearly 16 times the estimated charges over the tariff hit.

Moreover, tech giants such as Meta Platforms and Microsoft chose AMD's MI300 accelerator over Nvidia's chips, indicating it has developed a competitive niche. It also plans to release the MI350 this year and the MI400 in 2026 to advance its capabilities, which should close some of the competitive gap and position it to further capitalize on AI.

Additionally, all of these developments come at a time when AMD's forward P/E ratio is just 19. Analysts also believe AMD's overall revenue growth rate will rise from 14% last year to 23% in 2025. A strong performance from the data center segment and signs the down cycle may be ending in its gaming and embedded segments should put AMD in a more favorable light.

Ultimately, the selling in AMD stock appears overdone. The stock isn't cheap today, but its best days still lie ahead. With AMD competing more aggressively in the AI accelerator market, the stock appears to have what it takes to rise to all-time highs and beyond in the next few years.

Should you invest $1,000 in Advanced Micro Devices right now?

Before you buy stock in Advanced Micro Devices, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Advanced Micro Devices wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $524,747!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $622,041!*

Now, it’s worth noting Stock Advisor’s total average return is 792% — a market-crushing outperformance compared to 153% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 14, 2025

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Will Healy has positions in Advanced Micro Devices. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.