Is Advanced Micro Devices (AMD) Among the Best Stocks to Buy and Hold for 2025?

Advanced Micro Devices (AMD) has been a standout performer in the semiconductor industry, and its stock has been a popular choice among investors. As we look ahead to 2025, the question remains: is AMD still a strong buy and hold candidate? To answer this, we'll examine AMD's recent performance, growth prospects, and the challenges it faces.



AMD's Recent Performance and Growth Prospects

AMD's stock price has been on an upward trajectory since October 2022, with a return of 110% over the course of the bull market. The company's revenue growth has been impressive, with a 17% year-over-year increase in the third quarter of 2024, driven by strong sales of its Instinct GPUs and EPYC CPUs in the data center segment. AMD's data center revenue reached $3.5 billion, a stunning 122% increase from the same period in the previous year.

In the client CPU market, AMD Ryzen processors have gained market share, capturing 23.9% of the desktop CPU market share in the first quarter of 2024. This growth is expected to continue in 2025, driven by AMD's competitive positioning and strong product roadmap. The upcoming M1350 and M1400 GPUs are expected to further strengthen AMD's position in the PC market.



Challenges Facing AMD in 2025

Despite its strong performance, AMD faces notable challenges in 2025:

1. Data center competition: Nvidia's established dominance and software ecosystem present significant hurdles. AMD CEO Lisa Su's strategic initiatives will be crucial in addressing these issues to gain substantial market share. Without a dramatic change in 2025 on the software and infrastructure around MI300X, uptake and acceptance of the follow-on GPUs will remain limited. It is also possible that Intel is finally able to revitalize its Xeon family of CPUs for the data center and can force a momentum shift of its own away from AMD EPYC CPUs.
2. AI PC adoption: The success of AI-integrated PCs depends on user- and IT department acceptance. Can an AI-enabled PC make a consumer's life better or easier? If platforms like the Microsoft Windows Copilot+ segment fail to resonate and thus are unable to create demand for a more aggressive PC upgrade cycle, AMD's growth in the PC segment could be limited. Couple that with strong competition from Intel with its Core Ultra family of processors and the possibility that Qualcomm QCOM Snapdragon chips take AMD's place.



Conclusion: Is AMD a Strong Buy and Hold Candidate for 2025?

AMD's recent performance and growth prospects suggest that it remains a strong buy and hold candidate for 2025. However, investors should be aware of the challenges the company faces in the data center and AI PC markets. By capitalizing on its recent successes and navigating these described challenges, AMD is well-positioned to make 2025 a successful year. Investors should monitor AMD's progress and consider the risks and opportunities presented by the company's growth prospects.