AMD stock: Advanced Micro Devices (NASDAQ: AMD) has emerged as one of the noteworthy comeback stories in recent years. Having faced a stagnant phase in the mid-2010s, it is now a leader under CEO Lisa Su, excelling in CPUs, GPUs, and embedded chips.
With advancements in AI and a 127% surge in AMD stock in 2023, the question arises: Can investing in semiconductor stocks here make you a millionaire? Let’s delve into the details.
AMD’s Position:
AMD stock has seen remarkable success under Su’s leadership, particularly in limiting the focus to CPUs and GPUs. Despite the three-year development timeline in the semiconductor industry, Su’s strategic vision is yielding results.
During this time, AMD’s CPUs have outperformed longtime rival Intel, securing deals for Sony’s PlayStation and Microsoft’s Xbox in the GPU sector. Additionally, AMD’s GPUs have helped challenge Nvidia in certain cases, and its data center technologies have gained market share against Intel.
Furthermore, anticipating Nvidia’s dominance in AI chips, AMD released the Instinct MI300 accelerator chip and MI300X GPU, claiming it to be faster than Nvidia’s H100.
These new offerings have instilled optimism among investors, propelling semiconductor stocks to their highest levels at the end of December. Over the past year, AMD’s stock has more than doubled.
The Challenge of Becoming a Millionaire from Here:
Unfortunately, turning a modest investment into a million-dollar fortune requires exceeding the levels of growth that many can imagine. With AMD’s recovery, its market cap has reached around $220 billion, placing it in mega-cap territory.
If an investor bought $10,000 worth of AMD stock today, the market cap would need to reach approximately $22 trillion for that investment to turn into $1 million. Currently, the highest market cap stock, Apple, is around $3 trillion, less than one-seventh of the required amount.
Moreover, AMD needs significant improvement in its financial position to propel the stock into hyperdrive. In the third quarter of 2023, its $5.8 billion revenue increased by only 4% year-over-year, compared to a 9% annual decline in the first three quarters.
While AMD’s revenue growth needs improvement, even if it matches Nvidia’s 206% revenue growth in the third quarter of 2023, achieving millionaire status with just a few thousand dollars in recent investments seems unlikely.
A Millionaire Maker for Big Investors:
Becoming a millionaire is more attainable for large investors who bought AMD stock on October 8, 2014, when Su became CEO. If someone started with a $10,000 investment at that time, it would be worth approximately $414,000 today. This means that if the stock grows by 127% in 2024, the original investment for those investors will be close to $1 million.
While AMD may assist an investor in making money on the path to becoming a millionaire, it has possibly grown too large for small investors to achieve this feat independently. As a mega-cap stock, the likelihood of achieving 100 times or more growth to turn $10,000 into $1 million is improbable.
Nevertheless, given AMD’s performance under Su’s tenure, the trend of success is likely to continue. Thus, while not everyone may become a millionaire, a long-term investment in AMD stock can potentially make an investor quite wealthy.
