Cathie Wood, through ARK Funds, significantly bolstered her stake in Advanced Micro Devices (AMD) last week, acquiring 155,637 shares. This move, valued at approximately $22.11 million as of December 2’s $142.06 close, follows a pattern of investment in AMD, with ARK Funds having bought 111,080 shares on October 30, right after AMD’s shares took a more than 10% hit due to less-than-optimistic fourth-quarter guidance.
Despite AMD meeting third-quarter earnings expectations on October 29, with an adjusted EPS of 92 cents and revenue of $6.82 billion surpassing the forecasted $6.71 billion, the stock price dipped the next day. This decline was triggered by the company’s guidance for the fourth quarter, which projected revenue at $7.5 billion, just shy of the $7.54 billion analysts had anticipated. This cautious outlook seemed to dampen investor enthusiasm, even though the company’s performance was solid in terms of meeting current expectations.
However, AMD’s leadership, under CEO Lisa Su, remains bullish on the future, particularly in areas where demand for computation power is escalating. Su has highlighted significant growth opportunities in data center, client, and embedded businesses, driven by what she describes as “insatiable demand for more compute.” This optimism is particularly centered on the AI sector, where AMD is establishing itself as a key player amid the surge in AI spending by major cloud infrastructure providers, or “hyperscalers,” such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP).
AMD’s emphasis on AI and its strategic focus on expanding in data centers indicate a robust response to market needs, aiming to challenge Nvidia’s dominance in AI chips. While AMD lags behind Nvidia (NVDA) in market performance and narrative, the investment by Cathie Wood and ARK Funds signals confidence in AMD’s potential, especially in leveraging the AI market’s growth. This move could be seen as a strategic bet on AMD’s ability to capitalize on the AI surge and to possibly close the gap with Nvidia, which currently leads in the AI chip industry.
Wood’s investment strategy with AMD, focusing on technological disruptors with significant growth prospects, underscores her belief in AMD’s future in the tech landscape, particularly as it ramps up to meet the increasing demands of AI technologies in cloud computing and beyond.
Price Action: AMD shares are currently trading at $141.78, marking a slight decrease of 0.15%. The stock’s performance over the past year has been mixed, with a decline of 3.8% year-to-date but an increase of nearly 20% year-over-year.
h/t TheStreet
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