We recently compiled a list of the 10 Best NASDAQ Stocks To Invest In Right Now. In this article, we are going to take a look at where Advanced Micro Devices, Inc. (NASDAQ:AMD) stands against the other NASDAQ stocks.
This year has been a healthy year for the American stock market, fueled by a strong performance from technology stocks. Several indices capped their best week of the year in early September as stocks rose ahead of the Federal Reserve meeting where the central bank was expected to cut interest rates. NASDAQ has led the charge and registered a 20% growth during the first half.
While the index lists over 3,100 companies from various sectors, the rally has been led by its top seven holdings which account for 52% of the index. All of them being tech stocks. There is a mix of optimism and skepticism among investors on whether NASDAQ will be able to continue its good run over the second half of the year. Historical data over the past decade shows that in most instances, NASDAQ has finished stronger during the back half of the year. There have only been two years between 2014 and 2023 during which NASDAQ’s year-end returns were lower than first-half returns.
However, Fundstrat Global Advisors’ Tom Lee, who is generally bullish on the stock market, told CNBC earlier this month that investors need to be cautious, as stocks could fall 10% during the next eight weeks amid interest rate cuts and the nervousness around the upcoming presidential elections. The co-founder of the research firm also suggested that if the dip is too strong, it should be viewed as a buying opportunity for investors. Lee has largely been on the money and nailed most stock calls this year.
Other analysts also anticipate market volatility ahead of the presidential elections. Liz Young Thomas, the head of investment strategy at SoFi, while talking to Business Insider noted that stock activity lags between June and August while traders are on vacation. This results in strong market performance aided by thinner trade volumes. The activity jumps up significantly in September when they return to their desks, which often leads to stock price volatility. According to her, a two percent shift in share price in either direction has become the norm in September. However, during election years, the volatility is at its peak in mid-October instead of September, and the market returns to normalcy after the results are announced.
LPL Financial’s Adam Turnquist also expects seasonal shakiness in the months ahead, but pointed out, like Lee did, that the dip presents an opportunity to buy when the share is trading low and earn high returns when the market stabilizes.
Buying the September or October lows has been a very good trade. October, things start to improve, and then you have this November, December, year-end rally, typically very high average returns and high positivity rates for those months.
Both Turnquist and Young Thomas agreed that existing portfolios should not be readjusted because of seasonal volatility because it is short-term and hard to forecast.
With that said, let’s head over to see some of the best NASDAQ stocks to buy right now, given the current trends and future projections.
Methodology
We scanned Insider Monkey’s database of 912 hedge funds for the second quarter of 2024 to look for stocks listed on NASDAQ and picked the top 10 companies with the highest number of hedge funds having stakes in them. We ranked them in ascending order of hedge fund holders in each company.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close up of a complex looking PCB board with several intergrated semiconductor parts.
Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 108
Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the world’s leading computer processors and related technologies manufacturers. Its main products include microprocessors, graphic processors, personal computers, workstations, and embedded system applications. The company has also recently expanded to new markets such as high-performance computing and data centers.
During the second quarter of 2024, Advanced Micro Devices, Inc. (NASDAQ:AMD) reported a revenue of $5.8 billion, up 9% year-over-year, driven by higher-than-anticipated sales of Instinct, Ryzen, and EPYC processors. Data center sales represented over half of all revenue. The segment had a 115% growth in revenue, totaling $2.8 billion. The company’s gross margin also grew by 3%, while EPS registered a 19% increase to total $0.69, beating forecasts of $0.678 per share.
A steep rise in Instinct MI300 GPU shipments and increased deployment of EPYC CPUs significantly contributed to the data center’s revenue, with several hyperscalers selecting EPYC processors to power major portions of their applications. The company is looking forward to launching Instinct MI325X soon, which will offer twice the memory capacity of MI300 and 1.3 times improved performance than competitive offerings. The Zen-5 Turin CPU processors, publicly reviewed in June this year, are also likely to boost sales during the second half of the year.
For Q3, Advanced Micro Devices, Inc. (NASDAQ:AMD) anticipates revenue in the range of $6.4 billion to $7 billion, sequentially growing 15%. Since the announcement of results for Q2 and guidance for the following quarter on July 30, the stock has surged 38% and has an average share price target of $195.93, representing a further 24% upside from its current level. There is also a consensus among Street analysts on the stock’s Strong Buy rating. Advanced Micro Devices, Inc. (NASDAQ:AMD) is among the best NASDAQ stocks to invest in right now, with 108 hedge funds having investments in the company according to Insider Monkey’s database for Q2 2024.
However, the company does face some tests in the gaming segment, where revenue declined 59% to $648 million for the quarter, due to a drop in semi-custom SoC sales. Demand for these continues to remain flat, and revenue is set for further decline during the second half of 2024. The embedded segment also reported a 41% slide in revenue but is expected to improve in the quarters ahead. Despite these challenges, the company’s overall outlook is positive amid a strong trajectory in the data center space. The planned acquisition of Silo AI, the largest private AI lab in Europe, in Q3 is also set to further boost the bullish sentiment around the stock.
Overall AMD ranks 9th our list of the best NASDAQ stocks to invest in right now. While we acknowledge the potential of AMD as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AMD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.