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 is held for its attractive sustainability opportunity set, particularly in Digital Infrastructure, and for its high Corporate Resilience score across environmental and governance dimensions. The stock rose substantially in the quarter, driven by strong adoption of its AI-optimized GPU (graphics processing unit) and data center processor products. A series of major partnership announcements with cloud computing providers and continued evidence of market share gains in AI accelerator hardware reinforced investor confidence in the company's multi-year earnings growth trajectory.

In the second quarter of 2026, Advanced Micro Devices, Inc. was a top contributor to our absolute performance, reflecting strong investor conviction around the sustainability of AI capital expenditures. The semiconductor sector, including AMD, benefited from a significant rebound in U.S. equity markets, driven by robust earnings growth and a renewed focus on AI infrastructure spending. We believe that AMD's positioning within this growth cycle, particularly in AI-related applications, supports its potential for continued outperformance.

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) 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.

During the quarter, I have been buying some AI stocks, the ones that have most of the impact from the ramp still in the future, like power electronics, some semicap like Aixtron and those that held up well, like AMD. Although AMD was basically unhedging the position I have held for months, I believe it has a strong position in the market. The AI revolution is just starting, and I think AMD is well-positioned to benefit from this trend as it continues to develop its capabilities in the semiconductor space.

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.

Advanced Micro Devices, along with other tech companies, benefited significantly from positive investor sentiment in AI investment, contributing to strong returns for the sector. Each of these companies, including Advanced Micro Devices, returned over 100% in the second quarter alone. This momentum reflects the growing importance of AI in driving technological advancements and market performance, positioning Advanced Micro Devices favorably within the semiconductor industry.