AMD's AI Gambit: Onshoring, Open Ecosystems, and the Path to Long-Term Dominance

The race to dominate AI infrastructure is intensifying, and Advanced Micro Devices (AMD) is positioning itself as a strategic disruptor. Despite near-term valuation headwinds tied to short-term cash gains from asset sales, AMD’s moves to onshore critical AI manufacturing and secure a $10 billion partnership in Saudi Arabia’s AI compute fund mark a pivotal shift. These steps reframe AMD as a long-term leader in AI infrastructure—an undervalued bet on a $50+ billion AI hardware market. Here’s why investors should act now.

The ZT Systems Sale: Accelerating AI Production While Offloading Risk

AMD’s $3 billion sale of ZT Systems to Sanmina is often misunderstood as a “cash grab.” In reality, it’s a strategic pivot to control the AI supply chain. The deal includes:
- $2.25 billion in upfront cash, freeing AMD to invest in AI chip R&D.
- $450 million in contingent payments, tied to Sanmina’s performance in scaling U.S.-based production of AMD’s AI rack systems.
- A partnership making Sanmina AMD’s preferred U.S. manufacturing partner, ensuring fast time-to-market for hyperscalers and cloud providers.

This move is critical. By outsourcing manufacturing to Sanmina—a leader in high-complexity electronics—AMD avoids the capital and operational risks of running factories. Meanwhile, Sanmina gains a $5–$6 billion revenue stream from ZT’s existing operations, creating a win-win. The result? AMD can focus on what it does best: designing next-gen AI chips (e.g., GPUs, CPUs, and DPUs) while accelerating U.S. production of AI hardware at scale.

The Saudi Compute Fund: A $10 Billion Bet on Open AI Ecosystems

AMD’s partnership with Saudi Arabia’s HUMAIN venture—a $10 billion initiative to build 500 megawatts of AI infrastructure—is a geopolitical and technical masterstroke. Here’s why it outshines NVIDIA’s rival deals:
1. Open Architecture Dominance: HUMAIN’s infrastructure runs on AMD’s ROCm ecosystem, an open alternative to NVIDIA’s proprietary CUDA. This aligns with Saudi Arabia’s vision to avoid vendor lock-in and assert tech sovereignty.
2. Geopolitical Edge: Saudi Arabia is diversifying its AI supply chain, leveraging AMD’s neutral stance to reduce reliance on U.S. or Chinese tech giants. NVIDIA’s closed stack, while powerful, lacks this appeal.
3. Scale and Speed: The first 50 MW of compute capacity will be operational by late 2025, with exaflop-scale systems online by early 2026—a timeline NVIDIA’s proprietary ecosystem struggles to match.

The partnership also positions AMD to capture a 20% slice of the global AI data center market by 2030, potentially tripling AMD’s valuation to $200 billion.

Why AMD’s Stock is Undervalued: Cash Isn’t the Full Story

AMD’s stock has lagged behind NVIDIA’s (NVDA) dominance, with investors fixating on short-term metrics like the ZT cash proceeds or quarterly data center revenue. This overlooks the structural advantages now in place:
- Supply Chain Control: Sanmina’s U.S. facilities ensure AMD can meet demand without geopolitical bottlenecks.
- Open Ecosystem Leverage: ROCm’s adoption in Saudi’s infrastructure creates a recurring revenue stream and a beachhead for global expansion.
- Undervalued Valuation: AMD trades at 12x forward earnings, versus NVIDIA’s 27x, despite its growth runway.

The Case for Immediate Action: Buy AMD for Long-Term AI Dominance

The market’s myopic focus on near-term cash and NVIDIA’s current lead is a gift for investors. Here’s why to act now:
1. Structural Gains Ahead: The ZT deal and Saudi partnership create compound advantages—lower costs, faster scaling, and a moat against NVIDIA’s closed ecosystem.
2. ROI Potential: AMD’s stock could surge as the Saudi infrastructure ramps and ROCm gains traction. Even a 50% upside from current levels would align it with peers.
3. Risk Mitigation: Sanmina’s contingent payments and Saudi’s $10 billion commitment reduce execution risk.

Final Call: AMD is the AI Infrastructure Play of the Decade

AMD’s strategic moves—onshoring production, securing sovereign partnerships, and betting on open ecosystems—position it as the undervalued leader in AI infrastructure. While NVIDIA dominates today, AMD’s structural advantages in supply chain control and geopolitical alignment will pay off for decades.

Act now: Buy AMD for its long-term AI dominance, and ride the wave of a $50+ billion market reshaped by open ecosystems and U.S.-Saudi tech alliances.

Risk Disclosure: Investments carry risks. AMD’s success depends on regulatory approvals, manufacturing execution, and software ecosystem adoption.