Advanced Micro Devices, Inc. (AMD): A Bull Case Theory

We came across a bullish thesis on Advanced Micro Devices, Inc. on Phaetrix Investing’s Substack by Phaetrix. In this article, we will summarize the bulls’ thesis on AMD. Advanced Micro Devices, Inc.'s share was trading at $159.79 as of September 22nd. AMD’s trailing and forward P/E were 95.68 and 26.88 respectively according to Yahoo Finance.

Advanced Micro Devices (AMD) presents a compelling 12–18 month investment opportunity, targeting 12–18% base case returns ($168–$177) and 20–25% upside ($180–$187) if Nvidia’s execution issues persist. While markets focus on AMD’s CPU gains, the company’s transformation into a diversified GPU powerhouse is underappreciated, particularly as Nvidia faces unprecedented reliability problems.

AMD’s Q2 2025 results were strong, with 32% year-over-year revenue growth to $7.7 billion, driven by gaming revenue up 73% to $1.1 billion and data center revenue up 14% to $3.2 billion, signaling successful GPU diversification. Near-term margin pressure arose from export controls on MI308 accelerators, resulting in an $800 million inventory charge, but Wall Street forecasts support a 15–20% EPS CAGR through 2027.

Nvidia’s structural GPU reliability failures, including melted RTX 4090 connectors and boot issues with the RTX 5090/5080 series, create a rare competitive window, positioning AMD as a stable alternative. The RX 9070 XT demonstrates strong 1440p performance and improved power efficiency, while AMD’s open-source ROCm platform strengthens its data center positioning, despite export restrictions limiting near-term revenue. CPUs continue to provide stability, contributing roughly 50% of revenue and anchoring growth in consumer and enterprise markets.

AMD’s potential market share gains in the $120 billion discrete GPU segment could generate $3.6–$6 billion in incremental revenue, though Nvidia’s ecosystem dominance and limited RDNA 4 portfolio constrain high-end capture. Macro risks, including Fed rate hikes or AI capex slowdown, could pressure valuations. Nonetheless, AMD’s diversified revenue streams, competitive GPUs, and proven data center scale support multiple expansion. Key risks include Nvidia’s rapid fixes, export control tightening, and semiconductor cyclicality. Overall, AMD offers a strong risk/reward profile, with Nvidia’s vulnerabilities and AMD’s execution creating meaningful upside potential.

Previously we covered a bullish thesis on Advanced Micro Devices, Inc. (AMD) by StockOpine in May 2025, which highlighted strong Q1 revenue growth driven by Data Center and Ryzen processor sales, AI demand, and EPYC market share gains. The company's stock price has appreciated approximately 39% since our coverage. The thesis still stands as AMD’s diversified CPU and GPU business supports growth. Phaetrix shares a similar view but emphasizes Nvidia’s execution issues and AMD’s opportunity to gain GPU market share.

Advanced Micro Devices, Inc. is on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 113 hedge fund portfolios held AMD at the end of the second quarter which was 97 in the previous quarter. While we acknowledge the potential of AMD as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.