Advanced Micro Devices' (AMD) GPU Servers Gain Traction as Viable Competitor to Nvidia

Meridian Funds, managed by ArrowMark Partners, released its “Meridian Contrarian Fund” fourth-quarter 2025 investor letter. A copy of the same can be downloaded here. U.S. equity markets experienced a quarter supported by optimism around potential monetary easing and caution related to economic growth and valuations. Early gains were driven by strong AI-related earnings and the US Federal Reserve’s rate cut in October, which improved expectations for financial conditions. However, market sentiment cooled later in the quarter. Despite this moderation, the quarter contributed positively to robust annual results. Value stocks outperformed growth, returning 3.3% versus 1.2% for the quarter. Against this backdrop, the Fund delivered a return of 2.18% (net) in the quarter, underperforming the Russell 2500 Index’s 2.22% return and the secondary benchmark, the Russell 2500 Value Index’ 3.15% return. As the market heads into 2026, the firm is closely watching factors that may affect market returns, including monetary policy changes with a new Fed Chair and the sustainability of AI investments due to high valuations among hyperscalers. In the unpredictable backdrop, the firm concentrates on its systematic and consistent investment approach, which aims to pinpoint opportunities in companies that can achieve strong performance regardless of macroeconomic factors. In addition, please check the Fund’s top five holdings to know its best picks in 2025.

In its fourth-quarter 2025 investor letter, Meridian Contrarian Fund highlighted Advanced Micro Devices, Inc. (NASDAQ:AMD) as one of its leading contributors.  Advanced Micro Devices, Inc. (NASDAQ:AMD) is a leading semiconductor company that designs central processing units. Advanced Micro Devices, Inc. (NASDAQ:AMD) shares traded between $76.48 and $267.08 over the past 52 weeks. On January 28, 2026, Advanced Micro Devices, Inc. (NASDAQ:AMD) stock closed at $252.74 per share. One-month return of Advanced Micro Devices, Inc. (NASDAQ:AMD) was 18.01%. Advanced Micro Devices, Inc. (NASDAQ:AMD) has a market capitalization of $411.47 billion.

Meridian Contrarian Fund stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its fourth quarter 2025 investor letter:

"Advanced Micro Devices, Inc. (NASDAQ:AMD) is a global semiconductor company that designs central processing units (CPUs), which are the core component of most computing devices, and graphics processing units (GPUs), which accelerate operations running on CPUs. We invested in AMD in 2018 when the company was emerging from a prolonged period of underperformance resulting from lagging technology and market share losses to Intel and Nvidia. Our research at the time indicated that changes and investments under CEO Lisa Su had finally resulted in compelling technology that positioned AMD with competitive, and in some cases superior, products. We invested on the belief that AMD’s valuation at that time did not reflect the potential for its technology leadership to generate significant market share gains and improved profits. That thesis has continued to play out over several years. During the quarter, the stock reacted positively to continued progress by AMD to establish its GPU servers as a viable alternative to Nvidia’s offerings. We reduced our exposure to AMD into strength during the period as part of our risk-management practice."

Advanced Micro Devices, Inc. (NASDAQ:AMD) is in 19th position on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 115 hedge fund portfolios held Advanced Micro Devices, Inc. (NASDAQ:AMD) at the end of the third quarter, up from 113 in the previous quarter. While we acknowledge the potential of Advanced Micro Devices, Inc. (NASDAQ: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.

In another article, we covered Advanced Micro Devices, Inc. (NASDAQ:AMD) and shared top stock picks from Goldman Sachs Semiconductor Stocks. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.