Prediction: AMD Stock Will Soar Over the Next 8 Years. Here's 1 Reason Why.

Advanced Micro Devices (NASDAQ: AMD) stock has sold off in recent weeks. Weak PC sales and worries about competition in the artificial intelligence (AI) accelerator market seem to have weighed on the stock.

On the surface, one can see why AMD has struggled. Its $18 billion in revenue for the first nine months of 2024 rose 10%, far below the triple-digit revenue increases of its main rival, Nvidia. Moreover, revenue in AMD's gaming and embedded segments is down 58% and 38%, respectively, in the first three quarters of 2024.

Nonetheless, a secular trend in the chip market should stop the decline and send the stock soaring over the next few years. Here's why.

AMD's advantage

Despite competitive concerns, investors should not write off the AI accelerator business and its ability to fundamentally change AMD. Allied Market Research forecasts a compound annual growth rate of 38% for the AI chip market through 2032, indicating a strong likelihood of experiencing massive growth over that eight-year period.

With the shortage of Nvidia accelerators, customers like Microsoft and Meta Platforms have also turned to AMD. Consequently, data center revenue (which includes AI accelerators) grew 107% in the first nine months of 2023.

More importantly, the data center segment was 48% of AMD's revenue so far this year. As of now, Nvidia's data center segment is 87% of revenue in the first nine months of fiscal 2025 (ended Oct. 27). Over time, the data center segment is on track to make up more of AMD's revenue, perhaps even matching Nvidia's 87% share eventually.

Indeed, a recovery in other segments could also reduce the percentage of revenue coming from the data center segment. However, regardless of the revenue source, the improving growth likely means that AMD stock will prosper over the next eight years.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $348,112!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $46,992!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $495,539!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of December 9, 2024

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Will Healy has positions in Advanced Micro Devices. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.