AMD: A Semiconductor Stock To Watch

The semiconductor sector has gotten a lot of the spotlight during the AI revolution. NVIDIA gets most of the attention, but AMD is beginning to make a bit of a comeback.

AMD has been on a bit of a rollercoaster ride over the past year. With the market beginning to pay more attention to valuations over the past couple months, it might be time to reconsider this underrated name in the chip space.

Strong Fundamentals With Some Value As Well

Premium valuations can be warranted in a favorable economic backdrop. However, once those growth rates start to slow or conditions begin to turn south, stock prices can correct quickly for expensive stocks.

One thing that can add a bit of downside cushion is a quality balance sheet.

AMD’s balance sheet appears to be healthy. The company has over $5.8 billion in cash and short-term assets with relatively little long-term debt. That’s a big deal in today’s high-rate environment as it presents a major cost savings relative to competitors and provides added financial flexibility to make strategic investments in growth opportunities.

From a valuation standpoint, AMD currently trades at about 39 times forward earnings, which compares AMD’s current stock price to its expected generated earnings over the coming 12 months. That’s not cheap by most measures, but it’s more justifiable for a sector and company in a high growth phase.

The AI Revolution Is Still In The Early Innings

One of the biggest reasons investors may be warming up to AMD again is its AI strategy.

The company’s MI300 series chips are designed specifically for AI workloads and are starting to gain traction. CEO Lisa Su recently emphasized that AMD is seeing “strong demand” for its AI products and expects significant revenue growth in that segment through 2025 and beyond.

AMD is still playing catch-up with Nvidia in the AI arena (who isn’t at this point), but it’s no slouch itself. AI-related sales have grown rapidly over the past year and the trend could very well be set to continue.

Final Thoughts

The biggest AI players have seen their stock prices contract in recent months. AMD hasn’t been immune from that trend.

The company may have a couple of things going for it though. First, it may be earlier in its AI growth phase than its peers. Second, because it’s been drowned out by the NVIDIA story, shares may be underappreciated and undervalued.

For long-term investors, we feel that AMD looks like a potentially compelling growth story, particularly when it comes to AI. The stock has experienced some volatility, as have other chip stocks, but with solid financials, increasing demand for its high-performance chips and positive sentiment building, AMD could be gearing up for a run.

If you’re looking for an easy way to add enhanced AMD exposure to your portfolio, consider the GraniteShares 2x Long AMD Daily ETF (AMDL).

RISK FACTORS AND IMPORTANT INFORMATION

Link to Prospectus: graniteshares-etf-trust-s-l-single-stock-etfs-prospectus.pdf

This material must be preceded or accompanied by a Prospectus. Carefully consider the Fund’s investment objectives, risk factors, charges and expenses before investing. Please read the prospectus before investing.

The Fund is not suitable for all investors. The investment program of the funds is speculative, entails substantial risks and include asset classes and investment techniques not employed by most ETFs and mutual funds. Investments in the ETFs are not bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.The Fund is designed to be utilized only by knowledgeable investors who understand the potential consequences of seeking daily leveraged (2X) investment results, understand the risks associated with the use of leverage and are willing to monitor their portfolios frequently. For periods longer than a single day, the Fund will lose money if the Underlying Stock’s performance is flat, and it is possible that the Fund will lose money even if the Underlying Stock’s performance increases over a period longer than a single day. An investor could lose the full principal value of his/her investment within a single day.

The Fund seeks daily leveraged investment results and is intended to be used as short-term trading vehicles. This Fund attempts to provide daily investment results that correspond to the respective long leveraged multiple of the performance of its underlying stock (a Leverage Long Fund).

Investors should note that such Leverage Long Fund pursues daily leveraged investment objectives, which means that the Fund is riskier than alternatives that do not use leverage because the Fund magnifies the performance of its underlying stock. The volatility of the underlying security may affect a Funds' return as much as, or more than, the return of the underlying security.

Because of daily rebalancing and the compounding of each day’s return over time, the return of the Fund for periods longer than a single day will be the result of each day’s returns compounded over the period, which will very likely differ from 200% of the return of the Underlying Stock over the same period. The Fund will lose money if the Underlying Stock’s performance is flat over time, and as a result of daily rebalancing, the Underlying Stock volatility and the effects of compounding, it is even possible that the Fund will lose money over time while the Underlying Stock's performance increases over a period longer than a single day.

Shares are bought and sold at market price (not NAV) and are not individually redeemed from the ETF. There can be no guarantee that an active trading market for ETF shares will develop or be maintained, or that their listing will continue or remain unchanged. Buying or selling ETF shares on an exchange may require the payment of brokerage commissions and frequent trading may incur brokerage costs that detract significantly from investment returns.

An investment in the Fund involves risk, including the possible loss of principal. The Fund is non-diversified and includes risks associated with the Fund concentrating its investments in a particular industry, sector, or geographic region which can result in increased volatility. The use of derivatives such as futures contracts and swaps are subject to market risks that may cause their price to fluctuate over time. Risks of the Fund include Effects of Compounding and Market Volatility Risk, Leverage Risk, Market Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Other Investment Companies (including ETFs) Risk, and risks specific to the securities of the Underlying Stock and the sector in which it operates. These and other risks can be found in the prospectus.

This information is not an offer to sell or a solicitation of an offer to buy shares of any Funds to any person in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. Please consult your tax advisor about the tax consequences of an investment in Fund shares, including the possible application of foreign, state, and local tax laws. You could lose money by investing in the ETFs. There can be no assurance that the investment objective of the Funds will be achieved. None of the Funds should be relied upon as a complete investment program.

An investor should consider the investment objectives, risks, charges and expenses of the Funds (or of the investment company) carefully before investing. To obtain a prospectus containing this and other information, please call 1-844-476-8747. Read the prospectus carefully before you invest.

ETF distributed by ALPS Distributors, Inc. (ADI)

Control GRS001143