AMD(AMD) The Motley Fool·2025-04-30 08:58Core Viewpoint - The semiconductor sector, particularly companies like AMD and Nvidia, is experiencing volatility due to tariff-related economic uncertainties, but recent developments suggest a potential recovery for these stocks in 2025 [1][2]. Group 1: Market Performance and Economic Context - The PHLX Semiconductor Sector index has declined over 14% this year due to tariff-related economic uncertainties and fears of a global recession [1]. - Shares of AMD and Nvidia have both decreased by nearly 20% in 2025, but recent tariff developments indicate a possible rebound for these semiconductor stocks [2]. Group 2: AMD's Growth Prospects - AMD's revenue from data center chip sales surged 69% year over year in Q4 2024, reaching 130.5 billion, with a projected revenue of $43 billion for the current quarter, indicating a potential 65% growth [12]. - Nvidia controls approximately 90% of the data center GPU market, leading to a 93% growth in its data center revenue in the last reported quarter [13]. - The AI chip market is expected to grow significantly, with Nvidia's data center revenue indicating substantial growth potential in this space [14]. Group 4: Comparative Analysis of AMD and Nvidia - AMD is projected to experience a 33% earnings increase in 2025, with a further 36% growth expected in 2026, supported by its diversified business model [17][18]. - Nvidia's earnings growth is anticipated to slow to 28% in the next fiscal year due to increasing competition in the AI chip market [17]. - AMD's PEG ratio of 0.44 suggests it is undervalued compared to Nvidia's PEG ratio of 1.57, indicating that AMD may be the more attractive growth stock at this time [18][19].