Lisa Su has run AMD for almost 10 years, spearheading an impressive recovery.
The stock of Advanced Micro Devices (AMD 5.70%) has traded since 1972, but for most of its history, it lagged archrival Intel and gained little traction. By 2014, it went into a steep decline, and some feared a possible bankruptcy.
However, its investment thesis changed dramatically after Lisa Su became CEO in October 2014. Since that time, Intel has lost its technical edge, and Su’s emphasis on central processing units (CPUs) and graphics processing units (GPUs) has made AMD one of the top semiconductor companies.
Despite it lagging Nvidia in key areas, investors took to AMD stock. Nearly 10 years to the month after Su took over, a bet on the semiconductor stock has paid off handsomely.
AMD over the last 10 years
A $10,000 investment in AMD stock 10 years ago would be worth more than $395,000 today.
At that time, AMD shares traded in the $3.80 per share range, so $10,000 would have gotten an investor 2,631 shares.
Still, buying at that time was a considerable risk. Those investors initially witnessed the stock falling below $2 per share. At the time, chip investors had to wait three years for first-generation Epyc and Ryzen chips to make it to market, and they were not patient.
Nonetheless, they became more optimistic as the 2017 release of these chips neared. By the summer of 2016, investors who bought in the fall of 2014 were finally earning positive returns on the stock.
Furthermore, once it finally released chips to the market, AMD proved popular with its customers and investors. AMD later gained ground in the gaming console and PC markets and expanded into embedded chips when it acquired Xilinx.
Amid such activities, the stock began to rise significantly, and while pullbacks happened periodically, the stock always recovered.
Today, AMD seeks to gain ground in the AI accelerator market. Given its ability to catch up and the 38% compound annual growth rate forecasted for the AI chip market through 2032, the gains are unlikely to stop for AMD investors anytime soon.
Will Healy has positions in Advanced Micro Devices and Intel. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool recommends Intel and recommends the following options: short November 2024 $24 calls on Intel. The Motley Fool has a disclosure policy.
