AMD: From a Problem Child to a Chip Champion

Over the past decade, AMD has achieved an impressive track record, transforming from an underestimated chip producer to a serious competitor for Intel and Nvidia. Despite an explosive stock price increase of about 5,110% and a resulting tenfold rise in investments, the stock has remained largely stable over the past twelve months. A waning demand for PCs dampened the otherwise strong performance in the data center business. This consolidation could represent a brilliant opportunity for long-term investors. Under the leadership of Lisa Su, who took the helm in 2014, AMD underwent an impressive transformation through smart strategic management. A cornerstone was the introduction of custom APUs that combine CPU and GPU on a single chip. This technology resonated particularly with gaming console manufacturers like Sony and Microsoft, fueling growth in the enterprise, embedded, and semi-custom segments. Additionally, AMD mastered the "process race" by outsourcing production to TSMC, while Intel struggled with internal manufacturing issues. This fabless strategy enabled AMD to gain a technological edge. The push into the data center market with EPYC CPUs, Instinct GPUs, and programmable chips through the acquisition of Xilinx in 2022 also significantly contributed to the market shift. Between 2014 and 2023, AMD achieved an annual revenue growth of 17%. According to PassMark Software, AMD increased its share in the x86 CPU market from 23.4% to 36.4% between the quarters of 2014 and 2024, while Intel experienced a decline from 76.6% to 61.5%. A cooling demand for PCs in the first half of 2023 reduced AMD's revenues, exacerbated by macroeconomic challenges and declining console sales from Sony and Microsoft.