As the Nasdaq Composite index boasts an 8% surge since the start of 2024, sustaining a momentum that saw a staggering 43% climb in the previous year, investors across sectors are poised. The tech industry’s fervor, notably in burgeoning sectors like artificial intelligence (AI), continues to fuel optimism and drive market growth. The demand for AI services has acted as a catalyst, propelling stock prices and promising continued expansion in 2024.
Just as the adage goes, “The best time to plant a tree was 20 years ago, and the next best time is now.” This sentiment rings true for investors eyeing opportunities in 2024.
1. Advanced Micro Devices: A Chipmaker’s Ascent
Advanced Micro Devices (NASDAQ: AMD), a prominent chipmaker supplying hardware to a myriad of tech companies, is on a trajectory of growth and innovation. With its chips dominant in various devices from cloud platforms to gaming consoles, AI models, and customized PCs, AMD’s stock has witnessed a meteoric rise. The company’s revenue has soared by a staggering 240% over the past five years, with free cash flow experiencing a commendable surge of 306%.
AMD’s foray into AI is a strategic move that holds promise. The unveiling of its MI300X AI graphics processing unit designed to rival Nvidia’s offerings has already garnered attention from tech giants like Microsoft and Meta Platforms. While the full extent of these advancements is yet to reflect in earnings, the company’s fourth-quarter results for 2023 showcased a 10% revenue increase year-over-year, surpassing analyst expectations by a notable $60 million.
This upward trajectory hints at AMD’s potential, with projected earnings per share of over $5 by 2025. Utilizing a forward price-to-earnings ratio of 47 forecasts a share price of $257, marking a 51% stock growth by the following year. With AMD’s strategic expansions in AI, the company stands as an enticing investment opportunity in 2024.
2. Intel: Reigniting Growth Amid Challenges
Intel (NASDAQ: INTC), facing setbacks in recent years with a 41% decline in stock value over three years due to CPU market share erosion and a severed partnership with Apple, is undergoing a resurgence. The company’s strategic overhaul, embracing an internal foundry model to realize $10 billion in savings by 2025, underscores its commitment to thriving in the competitive landscape.
Intel’s pivot towards AI is another tactical move. In late 2023, the company introduced a range of AI chips including Gaudi3, challenging industry leader Nvidia’s offerings. Furthermore, Intel showcased Core Ultra processors and Xeon server chips integrating neural processing units for enhanced AI program efficiency.
With earnings projected to surpass $2 per share in the next year, utilizing a forward P/E ratio of 28 suggests a share price of $65. These projections position Intel for a 67% stock surge by fiscal 2025, cementing its status as a must-have in investment portfolios today.
3. Amazon: Harnessing AI for Future Growth
Amazon (NASDAQ: AMZN), with its stock soaring by 81% over the past year, exemplifies sustained success in e-commerce and cloud dominance. The company’s exponential revenue and operating income growth over the last decade reflect its industry leadership and market resilience, surging 546% and 20,000% respectively since 2014.
AI is at the forefront of Amazon’s strategic initiatives in 2024. Operating the world’s largest cloud service through Amazon Web Services (AWS), the company possesses immense potential to leverage its extensive cloud data centers in driving the generative AI market. The introduction of new AI tools in response to escalating demand underscores AWS’s pivotal role in Amazon’s future earnings landscape.
With projected earnings of $5 per share over the next two fiscal years, Amazon’s stock price could reach $237 based on a forward P/E of 44, translating to a 28% growth by fiscal 2025. While this growth may trail behind AMD and Intel, it surpasses the S&P 500’s recent 26% rise, making Amazon a compelling investment choice for investors aiming to capitalize on future market movements.
The Unwavering Story of Advanced Micro Devices in the Stock Market
As an investor, the question looms – should you consider allocating $1,000 towards Advanced Micro Devices at this moment? Engaging in such a decision merits a thorough evaluation.
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Noteworthy to recognize is that John Mackey, the erstwhile CEO of Whole Foods Market, presently a subsidiary of Amazon, sits on The Motley Fool’s board of directors. Additionally, Randi Zuckerberg, the former director of market development and spokesperson for Facebook, and sister to Meta Platforms CEO Mark Zuckerberg, also serves on The Motley Fool’s board of directors. It’s vital to mention that Dani Cook holds no position in any of the specified stocks. The Motley Fool has advised and expressed its support for Advanced Micro Devices, along with Amazon, Apple, Meta Platforms, Microsoft, and Nvidia. Furthermore, The Motley Fool promotes Intel and offers guidance for the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short May 2024 $47 calls on Intel. It’s of utmost importance to adhere to The Motley Fool’s comprehensive disclosure policy.
