Can investing $50,000 in advanced micro devices make you a millionaire?

Do you want to turn a small amount of money now into a large amount of money later? One way to achieve this goal is to invest in the right stocks. The question is: what stocks?

Some experienced investors advise that you start by focusing on companies that are leaders in their industries. But this advice poses a bit of a puzzle to anyone familiar with the most prolific companies in the tech sector. Many of these stocks are expensive and their growth prospects may be somewhat limited due to their already large size. How do you grow something that is already huge?

Advanced Micro Devices(NASDAQ:AMD) is not a leader in either the computer processor market or the graphics processor market. However, both the company and its stock are doing incredibly well. Will this growth continue long enough for you to invest $50,000 in AMD for a seven-figure sum at some point in your life? Read on.

2 Reasons for Advanced Micro Devices’ Unlikely Success

That’s true. Advanced Micro Devices is not a dominant name in any market. Nvidia(NASDAQ: NVDA) is miles ahead of it in terms of graphics processing and data center processors (particularly AI hardware), and despite all the recent challenges it faces, Intel(NASDAQ: INTC) it’s still a big name among regular computer processors. Market research organization Canalys reports that Intel controls almost 80% of the processor market. This leading market share isn’t just a matter of luck, either.

But advanced micro devices Is doing something well. The company’s revenue is expected to grow another 13% this year and then accelerate to a growth rate of 28% next year, with a similar double-digit pace likely for at least the next few years. Profits are expected to improve accordingly.

What gives? How can this perennially second-place company do so well when there are bigger and more established brands in the market?

There are two related explanations. First, technology and intellectual property are great equalizers. To take AlphabetGoogle as an example. It was not the first search engine in the world. This he became the most efficient search tool in the world, mainly because its search algorithm provided users with more meaningful and relevant results. Advanced Micro Devices may never be the world’s largest processor manufacturer, but its technology and intellectual property will be Down they allow the production of many, many cheaper processors that are perfectly suitable for their intended applications.

The second reason why AMD is able to defy the odds and continue to develop? There are more than enough things to deal with.

The emergence of artificial intelligence (AI) is an obvious opportunity in itself. CEO Lisa Su believes that by 2027, the world will be willing to spend as much as $400 billion annually on AI accelerator technology. By comparison, Advanced Micro Devices had sales of about $23 billion last year.

But it’s not just about AI-centric data centers. The development of artificial intelligence is also driving demand for higher-performance computers. As Su explained during the January earnings call, “To date, millions of AI-enabled PCs powered by Ryzen processors have been shipped, and Ryzen processors power more than 90% of the AI-enabled PCs on the market today.”

Mega-winner or not, AMD is displacing the competition

But the question remains: Is AMD a millionaire-making stock if you start with the much smaller sum of $50,000?

Never say never, but probably not.

Don’t panic if you have already invested in Advanced Micro Devices with high hopes! You’ll get better. Going from $50,000 to $1 million represents a massive 2,000% ROI. That’s a 20-bag trade After the opportunity underlying such gains has been recognized and reflected in the price. This is a difficult task and will likely take a lifetime to accomplish. For perspective, S&P500 it only achieves an average annual profit of around 10%.

However, just because AMD is no longer a millionaire company doesn’t mean it isn’t one of the best investment prospects in the semiconductor industry right now.

This is a strong argument. But it is supported by strong evidence. As an example, take last quarter’s growth on the desktop processor front. Anandtech data shows AMD’s desktop processor sales rose 4.7% in the first quarter, raising the company’s share of this key part of the processor market to a multi-year high of 23.9%. Its server processors also gained market share, reaching an all-time high of 23.6%, almost entirely at Intel’s expense.

Advanced Micro Devices is also entering the artificial intelligence hardware front. Although Nvidia’s dominance in this arena is not in danger, including data center operators Metaplatforms AND Microsoft are becoming more and more cost conscious and are turning to AMD for help. That’s why the company’s data center revenue grew 80% year-over-year in the three-month period ending in March.

And the driver of this growth was a relatively immature portfolio of products aimed at the artificial intelligence market! Just earlier this month, Advanced Micro Devices announced its new MD Instinct MI325X AI accelerator chip, which delivers 30% more bandwidth and twice the total memory compared to comparably priced products from competitive Nvidia.

Also check out the development rate of Advanced Micro Devices’ next-generation AI technology, which will match Nvidia’s current annual development rate.

Connect the dots. Today’s AMD is a different company than it was ten years ago. It is significantly different from what it was just a few years ago. What most of the market may be missing is how ready it is today AMD intends to deprive each of the leading brands of shares in both of its main markets.

AMD stock is worth a wild ride

If you feel tempted to buy into an undervalued growth company while its stock is down more than 30% from its record high in March, know that the analyst community strongly agrees with your choice. Their current consensus price target of $190.02 per share is over 20% above the current share price, and of the 49 analysts covering the company, 35 believe its shares are worth buying. Use the hint.

That being said, even confident bulls should know that AMD stock could remain extremely volatile for the foreseeable future. This volatility may involve measurably more declines before reaching the highest low.

Nevertheless, the wild ride will probably be worth it in the end. Most of the market simply doesn’t see or price in the full potential here. This suggests an opportunity for you.

Is it worth investing $1,000 in Advanced Micro Devices now?

Before you buy Advanced Micro Devices stock, consider the following:

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Suzanne Frey, an Alphabet executive, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former chief market development officer and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. James Brumley has positions at Alphabet. The Motley Fool holds positions in and recommends Advanced Micro Devices, Alphabet, Meta Platforms, Microsoft and Nvidia. The Motley Fool recommends Intel and recommends the following options: January 2025 $45 long calls with Intel, January 2026 $395 long calls with Intel, $35 short calls in August 2024 . with Intel and short calls for $405 in January 2026 with Microsoft. The Motley Fool has a disclosure policy.