In recent years, Advanced Micro Devices (NASDAQ:AMD) has emerged as a notable success story, transforming from a struggling entity to a leader in CPUs, GPUs, and embedded chips under the guidance of CEO Lisa Su. The stock has experienced significant growth, rising by 127% in 2023, particularly due to advancements in the AI field.

The Success Story

Under Su’s leadership since 2014, AMD focused on CPUs and GPUs, leading to remarkable success. Over time, the company’s CPUs outperformed Intel’s, securing contracts for Sony’s PlayStation and Microsoft’s Xbox. In the GPU arena, AMD gained ground against Nvidia and made strides in data center technologies, challenging Intel’s market share.

In the AI segment, AMD disrupted the dominance of Nvidia with the release of the Instinct MI300A accelerator chip and the MI300X GPU, claiming superiority over Nvidia’s H100.

These achievements have fueled investor optimism, propelling AMD stock to 52-week highs. Over the past year, the stock has more than doubled, reaching a market cap of nearly $220 billion, establishing itself as a mega-cap stock.

While AMD’s success is evident, transforming small investments into million-dollar portfolios poses significant challenges. With a current market cap of $220 billion, the stock would need astronomical growth to turn a $10,000 investment into $1 million. For comparison, the current highest market cap, Apple, stands at around $3 trillion.

Financial Considerations

Additionally, AMD’s financials would need substantial improvements to support such rapid growth. While revenue growth is expected to improve, matching Nvidia’s remarkable 206% revenue growth in the third quarter of fiscal 2023 seems unlikely. In the third quarter of 2023, AMD’s revenue grew by 4% year over year, a positive trend, but not at the scale needed for small investors to reach millionaire status solely through AMD stock.

Becoming a millionaire through AMD stock may be more feasible for larger investors who entered the market in 2014 when Su assumed the CEO role. Those who invested $10,000 on October 8, 2014, could now have a position worth approximately $414,000. Further growth in 2024 could bring their original investment close to $1 million.

Bottom Line

While AMD’s performance has been stellar and is likely to continue, achieving millionaire status solely through AMD stock appears challenging for small investors. As a mega-cap stock, it may not achieve the substantial increases required. Nevertheless, a long-term investment in AMD could still lead to significant wealth accumulation, even if the millionaire milestone remains elusive.

Featured Image: Pexels © Andrey Matveev

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