Cathie Wood Bets Big on Advanced Micro Devices Amid AI Chip Surge
As CEO and chief investment officer at Ark Invest, Cathie Wood has built a reputation for making bold investments in emerging technology. Ark’s significant positions include high-growth names like Tesla, Coinbase, Palantir Technologies, and Archer Aviation. Each of these companies is disruptive and well-positioned to benefit from the rise of artificial intelligence (AI), but none are currently valued as bargains. Recently, Ark’s buying activity hints that Wood is focusing on a particular segment of the tech industry: the AI chip market, where she appears to be favoring Advanced Micro Devices over chip leader Nvidia.
Between April 22 and May 1, Wood acquired over 212,000 shares of Advanced Micro Devices (NASDAQ: AMD). Below, we will explore the reasoning behind this investment and examine why now may be an advantageous time for investors to consider following her lead.
AMD’s Growing Influence in the Data Center Market
Nvidia currently dominates the semiconductor and data center markets with over 90% market share. This position solidifies its status as the industry leader, making its achievements hard to overlook. However, AMD has been steadily building a respectable data center business, which may have influenced Wood’s purchasing decisions. Below, we summarize AMD’s data center financial performance for the past year.
| Category | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | Q1 2025 |
|---|---|---|---|---|---|
| Data Center Revenue (in billions) | $2.3 | $2.8 | $3.5 | $3.8 | $3.7 |
| Data Center Operating Income (in millions) | $541 | $743 | $1,000 | $1,100 | $932 |
| Data Center Operating Income Margin | 22% | 25% | 28% | 29% | 24% |
Data source: Investor Relations.
While AMD’s quarterly financial performance may show fluctuations, this trend is typical in the cyclical semiconductor industry. The critical takeaway is that AMD’s data center business is experiencing growing sales alongside expanding operating margins.
Image source: Getty Images.
Potential for Future Growth at AMD
Last year, Nvidia earned more than $115 billion from its data center operations. This success makes Nvidia’s market dominance seem unassailable. However, the coming years may bring shifts in the chip market landscape. Major companies like Microsoft, Alphabet, and Amazon are developing in-house chip solutions, alongside Meta Platforms, which is also pursuing this path. These companies represent significant Nvidia customers, and the introduction of new chips could slow Nvidia’s growth.
In contrast, AMD collaborates with Meta Platforms, Microsoft, and Oracle in the data center arena, with each deploying AMD’s MI300X accelerators. Moreover, AMD is set to launch new architectures, including the MI350 GPU later this year, which could enhance its competitive edge.
Is AMD a Smart Investment Now?
As of now, AMD shares have dropped approximately 37% year-to-date. This decline may stem from growth investors adopting an all-or-nothing approach regarding AI chip investments—favoring either Nvidia outright or betting on AMD’s potential to surpass its rival.
However, this perspective may be too narrow. Nvidia is likely to remain a key player in the AI infrastructure space for years, yet this development doesn’t negate AMD’s value. While AMD may not reach Nvidia’s size, that doesn’t preclude it from being a worthwhile investment option. Currently, AMD trades at a forward price-to-earnings (P/E) ratio of about 22.4, indicating a market sentiment that is not overly optimistic about the company’s prospects.
The objective shouldn’t be solely about matching Nvidia’s data center size. Instead, it’s crucial to consider AMD’s capacity to expand its GPU business profitably. The financial metrics and AMD’s growing customer base suggest promising demand for its new chipsets, which could support robust growth.
Investing in AMD stock at this price point appears to be a strategic move by Wood. For long-term investors, adding AMD to their AI-focused portfolios may prove to be beneficial.
Should You Invest $1,000 in Advanced Micro Devices Today?
Before you decide to invest in AMD stock, consider this:
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Recall when Netflix made this list on December 17, 2004; a $1,000 investment back then would now be worth $614,911.* Similarly, Nvidia was on this list in April 2005, and a $1,000 investment would have turned into $714,958.*
Moreover, the average return for the Stock Advisor program is 907%, vastly outperforming the S&P 500, which stands at 163%. For those interested, further top stock selections can be accessed when joining Stock Advisor.
*Stock Advisor returns as of May 5, 2025.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is also a member. John Mackey, former CEO of Whole Foods Market, is similarly involved. Adam Spatacco holds positions in several tech stocks, including Nvidia and AMD. The Motley Fool recommends these and others for investment consideration.
The views expressed in this article are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
