Advanced Micro Devices Inc

We purchased our initial position in AMD in October 2022 at about $80 per share when the stock was depressed due to weak outlook for its end markets. Our investment was underpinned by our confidence in AMD's management team, its engineering culture, and its ability to consistently deliver competitive products. It turns out that CPU’s, AMD’s core product, are needed for Agentic AI! The stock took off earlier this year and is currently trading at above $500 per share. From our perspective, the upside we captured was not due to any attempt to predict AI’s trajectory, but simply the result of owning a quality company in a secularly growing sector, run by a strong management team at a sensible valuation.

Advanced Micro Devices (Advanced Micro) is a high-performance and adaptive computing company that designs and delivers processors, accelerators, graphics products, and software used across data centers, cloud computing, personal computers, gaming, and AI. The company is gaining share in server CPUs through its efficient EPYC processor lineup and building momentum in AI accelerators with its MI300 products. The manager believes that Advanced Micro has a credible path to sustained revenue growth, margin expansion, and earnings growth over the next several years, justifying a premium valuation as it benefits from rising demand for AI infrastructure.

Advanced Micro Devices (AMD) was the largest contributor to performance for the quarter, contributing 218bps. The demand for CPUs is expected to increase significantly as AI evolves into an agentic world, where AI agents autonomously complete tasks. AMD and Arm are positioned as primary beneficiaries of this CPU renaissance, with AMD's CEO raising the total addressable market of CPUs by 2030 from US$60bn to US$120bn, anticipating to capture over half of the market share. This presents a long runway for earnings growth ahead for AMD.

Advanced Micro Devices (AMD) was the largest contributor to performance for the quarter, contributing 218bps. The demand for CPUs is expected to inflect materially as AI evolves into an agentic world, where AI agents autonomously complete tasks. AMD and Arm are positioned as primary beneficiaries of this CPU renaissance, with AMD's CEO raising the total addressable market of CPUs by 2030 from US$60bn to US$120bn, anticipating to capture over half of the market share. This presents a long runway for earnings growth ahead for AMD.

Advanced Micro Devices (AMD) has been a notable performer in the AI sector, with a significant rise in its stock price. The company is highlighted as one of the 'AI winners' in the market, indicating strong growth potential. The letter notes that 'AI winners like US$0-1bn 21.9% Advanced Micro Devices (NASDAQ:AMD) rose,' showcasing its robust performance amidst a tech-heavy market. This suggests that AMD is well-positioned to capitalize on the ongoing AI trend, reinforcing its competitive edge in the semiconductor industry.

The fund did not own some of the larger central processing unit (CPU) companies such as Advanced Micro Devices and Intel, and the server CPU opportunity is having a renaissance driven by agentic AI. This lack of exposure ultimately detracted from performance, as the companies' share prices moved sharply higher during the quarter. The fund has exposure to the CPU market via NVIDIA and Broadcom, at what is felt to be a more modest valuation that may deliver better fundamental results in the long term.

Advanced Micro Devices (AMD) is a fabless semiconductor company focused on high-performance and AI computing. It designs and sells a broad portfolio of AI-optimised processors and networking chips, positioning itself as a full-stack solutions provider across cloud and AI infrastructure while maintaining strong competitive advantages. The ongoing AI infrastructure build-out is expected to drive significant demand for AMD's products, reinforcing its growth potential in the semiconductor market.

We added Broadcom and Advanced Micro Devices to increase exposure to AI hardware without chasing the most extended areas of the trend. Broadcom is positioned at the center of the custom AI compute buildout, with multi-year hyperscale relationships providing unusual visibility, while AMD offers exposure to compute demand with what we view as a more balanced risk-reward profile.

Advanced Micro Devices (AMD) designs a broad range of digital semiconductors serving PCs, gaming consoles, and data centers, including the rapidly expanding AI market. Under CEO Lisa Su, the company was pulled back from the brink of bankruptcy and reshaped into a high-performance computing leader. Over the past decade, AMD has steadily taken market share from Intel and emerged as a credible No. 2 in GPUs behind Nvidia. Management has guided to approximately $10 in Earnings per share (EPS) for FY2027E and more than $20 in EPS by 2030E. If the company delivers on these targets, then it should be a $400+ stock in a few years which is roughly 75% higher than current levels.

Advanced Micro Devices (AMD) has been positioning for this moment for several years. Under CEO Lisa Su's leadership, the company has transformed from a cyclical chip supplier into a strategic partner to major cloud and AI firms. Its latest generation of data-center processors, the Instinct MI450, is designed for large-scale AI workloads and is being deployed through partnerships with OpenAI and Oracle. These partnerships could represent multiple gigawatts of computing capacity and tens of billions in potential long-term revenue. Importantly, these agreements signal that AMD has achieved a level of technological credibility that enables it to compete head-to-head with NVIDIA for major infrastructure contracts. We view AMD as a diversified exposure to both the hardware and software sides of AI growth.