The technology sector has been abuzz with the artificial intelligence (AI) revolution for over a year. The widespread explosion of Microsoft (NASDAQ:MSFT)-backed generative AI company OpenAI, parent of ChatGPT, in November 2022 has led to a technological zeitgeist. As forecasts for generative AI remain positive for the upcoming years, the companies providing the architecture for AI are thriving.
Semiconductor chips play a crucial role in underpinning any stable AI system. A report by the Semiconductor Industry Association suggests that total sales from the semiconductor industry could reach $1 trillion by 2030, up from $574.1 billion in 2022 – representing a CAGR of 7.2%.
Stocks in this industry with a foothold in AI have experienced significant growth. Top semiconductor funds like the iShares Semiconductor ETF and VanEck Semiconductor ETF have risen by 50% and 59% over the past year, outperforming the broader Nasdaq Composite’s 37% rise.
Among these companies, semiconductor giant Advanced Micro Devices (NASDAQ:AMD) stands out as a strong long-term pick among analysts. Here are three reasons why the stock is considered a strong buy:
About AMD
Founded in 1969 and headquartered in Santa Clara, California, AMD is a giant in the semiconductor industry, commanding a market cap of $256.27 billion. The company is one of the world’s largest suppliers of microprocessors and related technologies for the computing and graphics industries. AMD’s products find applications in personal computers, servers, workstations, embedded systems, and gaming consoles.
AMD stock has delivered a stellar performance over the past year, gaining 130%, outperforming not only the broader tech sector and industry-specific ETFs like SMH and SOXX but also rival chip giants like Broadcom (NASDAQ:AVGO), Taiwan Semiconductor (NYSE:TSM), and Intel (NASDAQ:INTC).
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Author Stephanie Bédard-Châteauneuf 
