We recently published a list of 12 Best NASDAQ Stocks To Buy in 2025. In this article, we are going to take a look at where Advanced Micro Devices, Inc. (NASDAQ:AMD) stands against other best NASDAQ stocks to buy in 2025.
As 2025 began, King Lip, chief strategist and partner at BakerAvenue Wealth Management expressed his bullish outlook for tech stocks in 2025 during a CNBC interview. He underscored a strong belief in the continued outperformance of tech stocks in 2025, driven by robust earnings growth and ongoing investments in AI infrastructure. Here’s a short excerpt from our article on the 12 Best Technology Stocks to Invest In for the Long Term that covered this:
“…Lip was against the prevailing sentiment among investors that big tech has peaked and that funds should rotate into smaller stocks or other themes. He argued that the recent weakness in the tech sector is largely due to technical rebalancing rather than a fundamental downturn. He emphasized that cash is likely to flow back into leading tech stocks, as they are projected to deliver the highest earnings growth in 2025, with an anticipated earnings increase of over 20%.”
While acknowledging the high valuations of many tech stocks, he argued that they remain within acceptable historical norms. On January 9, Mark Avallone, president at Potomac Wealth Advisors, joined ‘The Exchange’ on CNBC to discuss why technology is the best sector to invest in right now. He asserts that above-target inflation will prevent the Fed from implementing further easing measures, countering the notion that higher rates are detrimental. He noted that market rates have surged to all-time highs, with a significant increase of 1,800 points since October 2023. Avallone emphasizes that tech stocks, particularly cash-flowing mega-cap and large-cap companies, have shown resilience against rising rates, attributing this to improved operational efficiencies and ongoing technology spending even in a slowing economy.
Avallone highlighted recent deal chatter in the tech sector, including Shutter Stock’s potential acquisition in the uniform space, reflecting growing interest in technology-driven solutions. He is optimistic about the incoming administration’s impact on economic efficiencies and stock performance, particularly for large-cap tech firms and mid-cap companies focused on innovation. He views Hilton favorably for its technological advancements in office management and cost efficiency. In the defense sector, he expressed confidence in Boeing’s growth potential, emphasizing that significant cuts to defense spending are unlikely and that advancements in tech will enhance military capabilities.
Methodology
We first sifted through the Finviz stock screener to compile a list of the top 20 NASDAQ for 2025. We then selected the 12 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q3 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Analyst Points Out AI Opportunities for Advanced Micro Devices (AMD)
A close up of a complex looking PCB board with several intergrated semiconductor parts.
Advanced Micro Devices, Inc. (NASDAQ:AMD) develops cutting-edge processors and graphics chips for applications like data centers, gaming, and embedded systems. This semiconductor manufacturer focuses on creating high-performance computing solutions that can power the demands of AI.
The company leads in chiplet technology, which uses smaller chips that interconnect to form a comprehensive system-on-a-chip (SoC). This approach accelerates development by allowing independent design and manufacturing. This has resulted in yield rates over 80%, compared to Intel’s 60%. Chiplet systems reduce costly manufacturing defects and can lower production costs by ~45%.
The chiplet market is expected to reach $411 billion by 2035. Advanced Micro Devices, Inc.’s (NASDAQ:AMD) chiplet technology now includes a new multi-chip stacking approach that will improve efficiency in future Ryzen SoCs. These are processors that integrate a CPU, GPU, and other essential components onto a single chip. S&P Global recently upgraded Advanced Micro Devices, Inc. (NASDAQ:AMD) to ‘A’ credit rating from ‘A-‘. This was because of strong x86 and AI chip sales, driven in part by the chiplet technology, projecting continued growth through 2025.
In the third quarter of 2024, the data center segment’s revenue surged 122% year-over-year to a record $3.5 billion, contributing over half of Advanced Micro Devices, Inc.’s (NASDAQ:AMD) total revenue of $6.8 billion. The company’s advancements in chiplet technology are pivotal to the success of its high-performance data center products, positioning it for sustained growth. However, Goldman Sachs lowered its rating on the company to Neutral from Buy and slashed its price target on the shares to $129 from $175. This was due to a lower demand for PC and server chips, along with its weaker-than-expected revenue from data centers.
Overall, AMD ranks 9th on our list of best NASDAQ stocks to buy in 2025. While we acknowledge the growth potential of AMD, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AMD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
