Advanced Micro Devices (AMD): Riding the AI Wave with Billionaire Phill Gross’s Backing

In a tech landscape increasingly dominated by artificial intelligence (AI), advanced micro devices (AMD) has emerged as a key player in the semiconductor race, drawing the attention of billionaire investor Phill Gross. As co-founder of Adage Capital Management—one of Wall Street’s most respected hedge funds—Gross has quietly built a $170 million stake in AMD, positioning it as his fifth-highest-ranked stock pick with an estimated 38.84% upside potential through 2025. This article explores why AMD is capturing Gross’s interest, its strategic advantages, and the challenges it must navigate to realize its full potential.

AMD’s Financial Momentum: A Data Center Story

AMD’s recent financials reflect a company pivoting from traditional computing to AI-driven growth. In Q4 2024, revenue hit $7.7 billion, with non-GAAP net income surging to $1.8 billion. The Data Center segment was the star, reporting a 69% year-over-year (YoY) revenue jump to $3.9 billion, fueled by its EPYC processors and Instinct accelerators. Annual data center revenue nearly doubled to over $5 billion, with AI-related sales accounting for nearly half of this total.

This momentum isn’t accidental. AMD’s MI300 GPU and Instinct accelerators are now critical components for cloud providers like Oracle, which saw performance gains of up to 30% with AMD’s 5th Gen EPYC processors. The firm’s AI strategy has also drawn institutional backing: as of Q4 2024, AMD ranked among the top holdings of 96 hedge funds, with Adage Capital alone accounting for a $170.35 million stake.

The AI Opportunity: Riding a $500 Billion Market

The AI market is booming, projected to grow from $100 billion in 2024 to $400–500 billion by 2027. AMD is betting big here. In 2024, it raised its AI revenue guidance to $5 billion, up from $4.5 billion, signaling confidence in its ability to capture share.

Gross’s bullish stance hinges on AMD’s ability to erode rivals’ dominance. Artisan Global Opportunities Fund estimates NVIDIA’s AI market share could drop to 60–80% by 2027, while AMD’s share may rise to 10–20%—up from 5% in 2024. This shift is critical, as GPU sales for AI training and inference remain the sector’s most profitable segment.

Risks: Trade Tensions, Competitors, and Cyclicality

Despite its strengths, AMD faces headwinds. The 34% tariff China imposed on U.S. imports in late 2024/early 2025 caused AMD’s stock to dip 8.57% in short-term trading, reflecting fears of reduced demand and margin pressure. Meanwhile, competitors like Broadcom and Marvell are launching custom AI accelerators, intensifying competition.

Cyclical challenges also linger. AMD’s Gaming segment revenue fell 59% YoY in Q4 2024 due to declining semi-custom sales, while the Embedded segment dropped 13%. These declines highlight reliance on data center growth to offset weaker consumer demand.

Insider and Institutional Activity: A Mixed Signal

Institutional support remains robust, with Vanguard, BlackRock, and State Street collectively holding over $42 billion in AMD shares as of Q4 2024. However, AMD’s CEO, Lisa Su, sold $143.69 million worth of shares in late 2024, reducing her holdings to 3.57 million shares. Minor insider purchases by other executives in early 2025 were negligible by comparison, raising questions about near-term confidence.

Gross’s Calculus: Long-Term Value Over Short-Term Volatility

Gross’s investment philosophy—rooted in fundamental analysis and risk arbitrage—aligns with AMD’s strategic trajectory. While tariffs and cyclical weakness create near-term uncertainty, AMD’s AI-driven products and data center leadership position it to capitalize on secular trends.

The stock’s 38.84% upside potential as of May 2025 reflects Gross’s conviction that AMD’s $10 billion AI revenue target by 2026 is achievable. This would represent a doubling of its 2024 AI sales, supported by its MI300X GPU and partnerships with cloud giants like Microsoft and AWS.

Conclusion: A Compelling, High-Reward Proposition

AMD is a classic “high-risk, high-reward” bet, but the data favors Gross’s bullish stance. With $5 billion in AI revenue already booked, a 69% data center revenue surge, and a $400–500 billion AI market to tap, AMD’s upside is substantial.