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Could AMD Join the League of the Magnificent 7?

Joey Frenette

Published: January 9, 2025 11:25 am

The Magnificent Seven group is a tough league to break into. Just when you think the group is about to slow down and give up ground to the rest of the S&P 500, the cohort finds a new way (and a new leadership group within the cohort) to lead it higher.

Undoubtedly, there may be growing skepticism about whether the Mag Seven trade will continue to lead to impressive returns.

Could crushing the market really be as easy as betting on the group? Let’s just say that beating the market would have been too difficult if you hadn’t had much exposure to the names in the past three years. Eventually, the Mag Seven will fade, and Mad Money host Jim Cramer will need to give us a new acronym.

In the same way, the Mag Seven succeeded FAANG, another basket (and catchy acronym) will take over, perhaps sooner rather than later, as performance across Mag Seven names widens while other potentials look to make their way into the most exclusive group on Wall Street.

One of the potentials is Advanced Micro Devices (NASDAQ:AMD), an Nvidia (NASDAQ:NVDA) rival that has a lot of fight in it.

Simply put, it doesn’t sound like AMD or its legendary CEO Lisa Su, recently named Time’s CEO of the Year for 2024, are content with a silver medal in the artificial intelligence (AI) race.

Coming second to Nvidia isn’t a bad thing. But with such high ambition and a track record of pulling off seemingly impossible turnarounds, Su is worth betting on, even if you’re convinced Nvidia and Jensen Huang will stay on top for the long haul.

AMD makes a big splash at CES 2025

Going into 2025, AMD stands out as a share gainer in an AI marketplace that still has legs. At the latest CES (Consumer Electronics Show) 2025, Nvidia was not the only firm that stole the show. AMD had a lot of impressive capabilities to show, with a new AI PC and a slate of chips, including the Ryzen 9900X3D and 9950X3D CPUs for consumers and Ryzen AI Max and Max Pro, Ryzen AI 200, and 300 series for the AI crowd.

Additionally, new software advancements, like FidelityFX Super Resolution 4 (FSR 4), could act as “moat wideners” for the firm as it looks to build an ecosystem to better challenge the likes of Nvidia. Indeed, the key to winning the AI race may lie in software advancements as much as hardware. In any case, it’s clear that AMD has game after checking out the slate of new products unveiled at CES 2025.

Of course, it’s tough to tell how AMD’s next-gen AI-focused offerings can help it beat Nvidia. If progress on AI is, in fact, running into a bit of a roadbump or “steeper” hill from here, perhaps there’s more to AI chips than just maximum performance and power efficiency. Low cost and perception of high value could be key should the latter half of the decade see clients shift away from going after the very best in favor of the very best value.

Perhaps the consumer class is an area where AMD can shine. As you may know, gaming PCs are expensive, especially AI-capable ones. As AMD makes a splash in the AI laptop market, perhaps AMD may have the means to make up a bit of ground to catch up with a seemingly unstoppable rival in Nvidia, as more cost-conscious consumers look to get the most firepower from their gaming PCs per dollar spent.

The bottom line

AMD shares look like fantastic value today, even though they’re still down around 39% from last year’s all-time highs. If the latest AI PC push hits the mark in 2025, Su and AMD may have what it takes to pull off an epic comeback year.

In the meantime, AMD stock has been anything but magnificent. With Time’s CEO of the Year in the driver’s seat, though, I wouldn’t dare bet against the firm as it looks to prove its doubting analysts wrong in an effort to become one of magnificent ones.