Advanced micro devices (NASDAQ:AMD) It has become one of the most famous comeback stories in recent years. It was left for dead in the middle of the last decade, becoming a leader in CPU, GPU and embedded chips under CEO Lisa Su.
As it makes progress in AI, AMD stock is on an upward trajectory, rising 127% in 2023. However, determining whether the semiconductor stock can mint millions from here requires a closer look.
AMD case
AMD stock has benefited from a tremendous level of success under Su’s leadership and has the potential to soar much higher. When Su took over in 2014, she narrowed the company’s focus to central processing units (CPUs) and graphics processing units (GPUs). Since product development timelines in the semiconductor industry take at least three years, Su’s vision took time to come to fruition.
However, at the time, the company’s CPUs had long outperformed those of competitors Intel Corporation. In the field of graphics processing, it has won power contracts SonyPlayStation and MicrosoftX-Box. Additionally, its GPUs helped it gain traction Nvidia In some cases, its data center technologies have helped it gain market share from Intel.
Furthermore, when it looked like Nvidia would dominate AI chips, AMD released the Instinct MI300A accelerator chip and the MI300X GPU, which AMD claims is a faster chip than Nvidia’s H100 chip.
These new offerings sparked investor optimism, sending semiconductor stocks soaring to 52-week highs in late December. Over the past year, AMD shares have more than doubled.
Why minting millionaires from here can be a struggle
Unfortunately, turning small investors into millionaires will require a level of growth that exceeds the imagination of many. As AMD recovered, its market cap reached nearly $220 billion, putting it in a massive market cap position.
If an investor bought $10,000 worth of AMD stock today, the market value would have to be approximately $22 Trillion For this position to become a million dollars. Currently the stock has the highest market value appleIts market value is about $3 trillion, less than one-seventh of this amount.
Also, AMD’s financials will have to make significant improvements to send the stock into a hyperdrive. In the third quarter of 2023, its revenue of $5.8 billion rose 4% year over year, compared to a 9% annual decline for revenue in the first three quarters of the year.
AMD’s revenue growth should improve. However, even if it can find a way to match Nvidia’s 206% revenue growth in the third quarter of fiscal 2023 (ending October 29), it likely won’t make new investors with just a few thousand to invest into millionaires.
Millionaire status is more easily attainable for large investors who bought the stock on October 8, 2014, the day Su became CEO of AMD. If you started a position with $10,000, it would be worth about $414,000 today, which means that if the stock jumps another 127% in 2024, those investors’ original investment would be close to $1 million.
AMD as a millionaire manufacturer
Although AMD may be helping an investor make money on their way to becoming a millionaire, it may have become too big to accomplish this feat on its own for small investors. As a mega-cap stock, it is unlikely to achieve the 100x or more increases needed to turn $10,000 into $1 million.
However, AMD’s performance has far outperformed benchmarks during Su’s time at the company. Given past successes, this trend is likely to continue. Hence, even if a person cannot become a millionaire, an investor can become significantly richer through a long-term investment in AMD stock.
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Will Healy holds positions at Advanced Micro Devices and Intel. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Microsoft, and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short February 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.
Can AMD Stock Help You Become a Millionaire? Originally published by The Motley Fool