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) 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.