Shares surge 49% YTD as AI chips boost sentiment
Advanced Micro Devices, Inc. (NASDAQ:AMD) is seeing a strong rebound in 2025, with its stock up 49% year-to-date. The gains come as investors grow more confident in AMD’s ability to compete in the artificial intelligence (AI) chip market. After initially trailing Nvidia due to the latter’s early dominance in AI accelerators, AMD is now viewed as a credible challenger, particularly with the rollout of its own AI-focused GPUs and CPUs.
Investor sentiment has been supported by comments from market observers and analysts who believe AMD could gain meaningful market share in the AI segment. The company’s recent momentum is attributed to both strong product demand and broader bullishness around the AI sector.
Market voices back AMD’s direction
CNBC’s Jim Cramer pointed to investor enthusiasm around AI chips as a key factor behind AMD’s stock performance. “It’s the AI-related chips that are on fire today… AI is just moving along,” he noted during a recent market segment, emphasizing that the current rally reflects strong optimism across technology stocks, especially those tied to AI infrastructure.
In earlier remarks, Cramer acknowledged that while AMD’s stock has rallied sharply from its lows, further gains are possible. He cited the leadership of CEO Lisa Su and the company’s competitive GPU offerings as signs of long-term strength. “There’s a GPU shortage everywhere,” he said. “She’s got what it takes to take that stock much higher.”
AMD’s AI positioning and industry outlook
AMD’s approach to AI centers on developing efficient, scalable accelerators that can challenge Nvidia’s dominance in data centers and enterprise-grade applications. Its MI300 chip series is gaining attention for its performance and integration capabilities, positioning the firm to win contracts from hyperscalers and cloud providers.
The broader semiconductor landscape remains favorable, as global demand for AI compute continues to rise. GPU shortages persist across the market, and AMD’s ability to scale production and offer cost-effective alternatives may give it a strategic edge over the next 12 to 24 months.
Relative valuation and other opportunities
Despite strong performance, AMD is still considered more affordable than Nvidia by many analysts, offering investors an entry point into the AI boom without paying peak valuations. However, some investors argue that there are even more undervalued AI plays with significant upside potential and lower perceived risk.
One such opportunity involves AI firms that are directly benefiting from President Trump’s new tariff policies and the broader trend of onshoring U.S. tech production. These companies, often overlooked by mainstream investors, may provide faster returns in the short term due to favorable policy shifts and expanding domestic demand.