Is AMD The Dark Horse Of The AI Silicon Race?

Following the launch of OpenAI’s surprisingly competent generative AI tool, ChatGPT, major tech players appear to be doubling down on the artificial intelligence space. This has turned the spotlight on companies that make graphics processing units, the de-facto chips for running AI-related workloads. Nvidia – the dominant player in the GPU space – has been the biggest beneficiary of the trend thus far. Nvidia stock is up over 3x this year and the company just published a blowout set of Q2 results, with revenue growing 2x and profits rising over 5x compared to last year as sales to data center customers surged.

We note that AMD stock has had a Sharpe Ratio of 0.8 since early 2017, compared to close to 0.6 for the S&P 500 Index over the same period. This compares with the Sharpe of 1.3 for the Trefis Reinforced Value portfolio. Sharpe is a measure of return per unit of risk, and high-performance portfolios can provide the best of both worlds.