Jim Cramer Believes Advanced Micro Devices (AMD) Has Strong Momentum

Jim Cramer discusses Advanced Micro Devices (AMD) as a strong performer, with shares up 33% YTD, and believes it will continue to benefit from strong earnings results from Taiwan's TSMC. He acknowledges AMD's momentum and potential in the AI market, but notes that some AI stocks may hold greater promise for higher returns with limited downside risk.

As the artificial intelligence (AI) revolution continues to gain momentum, two semiconductor stocks are poised for significant growth in the second half of 2025: Advanced Micro Devices (AMD) and Taiwan Semiconductor Manufacturing Company (TSMC). These companies are at the forefront of meeting the increasing demand for AI chips and fabrication services.

Advanced Micro Devices (AMD)
AMD is strengthening its position in the AI market through its expanding portfolio tailored for data center applications. The latest MI300 series accelerator family, based on the AMD CDNA 3 accelerator architecture, supports up to 192 GB of HBM3 memory, positioning it competitively with NVIDIA's H100 NVL dual-GPU card, which offers 188 GB of HBM3 memory [1]. This new series is designed to efficiently run large language model training and inference for generative AI workloads.

The financial performance of AMD's data center business reflects this growth. In the first quarter of 2025, data center revenues surged 57.2% year over year to $3.674 billion, accounting for 49.4% of total revenues [1]. The Zacks Consensus Estimate for the second quarter of 2025 pegs data center revenues at $3.31 billion, indicating a year-over-year increase of 16.7% [1].

AMD's stock has gained 28.8% year to date (YTD), outperforming the broader Zacks Computer & Technology sector's return of 8.3% and the Zacks Computer - Integrated Systems industry's increase of 26.6% [1]. The company's stock is trading at a premium, with a forward 12-month Price/Sales ratio of 7.29X, compared to the industry’s 3.92X [1].

Taiwan Semiconductor Manufacturing Company (TSMC)
TSMC is set to benefit from the rising demand for fabrication services as chipmakers release new designs. The company's expertise in manufacturing advanced semiconductors, including AI chips, positions it to capitalize on the growing need for high-performance and accelerated computing.

TSMC's strong financial performance in the first half of 2025 is a testament to its resilience and adaptability. Despite market volatility, TSMC has maintained a strong position in the semiconductor manufacturing industry. The company's ability to meet the increasing demand for advanced chips makes it a key player in the AI chip market.

Conclusion
Advanced Micro Devices (AMD) and Taiwan Semiconductor Manufacturing Company (TSMC) are well-positioned to benefit from the growing investment in AI and the increasing demand for chips. As the second half of 2025 approaches, investors should keep a close eye on these two stocks, which have the potential to soar as the AI revolution continues to unfold.

References:
[1] https://www.ainvest.com/news/advanced-micro-devices-tsmc-ai-stocks-watch-2025-2507/
[2] https://www.gurufocus.com/news/2979349/mizuho-increases-amd-amd-price-target-as-ai-market-expands-amd-stock-news
[3] https://www.theglobeandmail.com/investing/markets/stocks/TSM/pressreleases/33527623/the-zacks-analyst-blog-highlights-taiwan-semiconductor-manufacturing-nvidia-apple-advanced-micro-devices-broadcom-and-intel/