Cathie Wood is returning to Advanced Micro Devices (AMD), adding to her position in the chip stock across several of her Ark Invest exchange-traded funds.  Since June 20, Wood has added nearly $50 million in shares, including via opening a new position in AMD in her Ark Fintech Innovation ETF (ARKF). 

Across her portfolio, AMD is the 11th-largest holding with just under $287 million in shares accounting for 2.5% of Ark Invest holdings. 

About Advanced Micro Devices 

Advanced Micro Devices, or AMD, is not just the “other” chip company. It specializes in designing high-performance chips, including CPUs, GPUs, server processors, and AI accelerators for key markets such as data centers, artificial intelligence, and gaming.

Valued at a market cap of $233 billion, AMD stock is up 17.5% on a YTD basis.

So, should investors follow Cathie Wood’s footsteps and load up on the AMD stock? I reckon they should, and here’s why.

Q1 Marked By Solid Growth

AMD delivered an impressive start to the year, with first-quarter revenue rising 36% year-over-year to reach $7.4 billion. This performance was largely driven by a standout contribution from the Data Center segment, which recorded a 57% annual increase in revenue, climbing to $3.7 billion. Adjusted gross margin expanded to 54%, up from 52% in the same quarter last year, reflecting improved operational leverage and underlying competitiveness.

Adjusted earnings per share grew by 55% during the quarter, reaching $0.96 and topping the consensus forecast of $0.93, underscoring the company’s earnings momentum.

The quarter also reinforced AMD’s ability to generate strong operating cash flows. Net cash provided by operating activities rose to $939 million, marking a significant jump from $521 million in the prior-year period. The company exited the quarter with a cash reserve of $6 billion, comfortably covering its short-term debt obligations, which stood at $947 million.

Looking ahead, AMD expects second-quarter revenue to again total $7.4 billion, representing a 34.5% increase over the previous year. However, the company has guided for a gross margin of 43% – well below the 52% margin reported in the comparable quarter last year. This anticipated margin compression is primarily attributed to estimated inventory write-downs of $800 million linked to recently imposed China export restrictions.

“Advancing” Steadily

In my most recent analysis of AMD, I had made a case as to how the No. 2 player in the chip market is leaving no stone unturned to close the large gap it has with Nvidia (NVDA). Since then the stock is up almost 39% and a major reason for the upside can be attributed to the company’s “Advancing AI” event.

The event brought with it a slate of key product introductions, the most notable being the debut of the Instinct MI350 series. This latest generation of GPUs, comprising the MI350X and MI355X, is built on the CDNA 4 architecture and is aimed squarely at AI and high-performance computing workloads. These processors utilize HBM3E memory and, according to AMD, offer up to three times the performance of their immediate predecessors. The company further claims a cost advantage in LLM inference tasks compared to rival Nvidia products. Initial results from major cloud and AI companies reportedly show encouraging signs, and AMD disclosed that seven of the 10 leading AI firms are already incorporating its chips in some fashion.

In conjunction with its hardware rollout, AMD introduced ROCm 7, the newest edition of its AI software suite. The update broadens GPU compatibility to include mainstream Radeon models and supports both Windows and Linux systems. The company also unveiled its AMD Developer Cloud, a resource offering remote access to its Instinct GPUs and developer tools, which could drive broader industry adoption.

In the gaming and workstation category, AMD announced its RDNA 4 graphics architecture, leading with the Radeon RX 9000 series, specifically, the RX 9070 and RX 9060 XT. These GPUs are tailored for the high midrange and mainstream market, bringing improvements in ray tracing, second-generation AI acceleration, and the new FSR 4 upscaling technology. 

Looking forward, AMD previewed the forthcoming Instinct MI400 series, projected for release in 2026. The company estimates that the new lineup could deliver up to tenfold inference performance improvements in certain workloads compared to the MI300. These chips will be integrated into AMD’s Helios rack-scale AI infrastructure alongside Zen 6-based EPYC CPUs and enhanced networking solutions. The company also plans to expand its consumer lineup later in 2025 with additional RDNA 4 GPUs and Zen 5 desktop CPUs equipped with built-in graphics and AI acceleration through NPUs.

Analyst Opinions on AMD Stock 

Taking all of this into account, analysts have assigned a rating of “Moderate Buy” for the stock with a mean target price of $133.73. Although this has already been surpassed, the high target price of $200 indicates upside potential of about 40% from current levels. Out of 42 analysts covering the stock, 28 have a “Strong Buy” rating, two have a “Moderate Buy” rating, and 12 have a “Hold” rating.