As long-term buyers, it is most essential to concentrate on the place an organization will likely be in 10 years and make investments accordingly. However it’s additionally useful to seek out development shares benefiting from catalysts that might ship their shares larger within the close to time period.
After falling earlier this yr, Superior Micro Gadgets (AMD -1.98%) and Amazon (AMZN -0.68%) are beginning to see their share costs rise. AMD is a pacesetter in supplying synthetic intelligence (AI) chips to knowledge facilities, whereas Amazon is benefiting enormously from its rising use of robotics in its success facilities.
Here is what’s driving these shares larger and why they’ve room to run.
Picture supply: Getty Photographs.
1. Superior Micro Gadgets
Shares of AMD have soared 61% since hitting a 52-week low of $76.48 in April. The corporate reported its third consecutive quarter of accelerating income development because it prepares to launch new variations of its MI300 sequence of graphics processing items (GPUs) for knowledge facilities.
AMD is constructing momentum. It not too long ago introduced an settlement with Saudi Arabia’s new AI enterprise HUMAIN to construct cost-efficient computing methods utilizing AMD chips to energy superior AI workloads for enterprises, start-ups, and governments.
This information comes as AMD is about to launch its MI350 GPU. Its first knowledge heart GPU debuted in 2023: the MI300 chip, which raked in $5 billion of income final yr.
The MI350 guarantees 35 instances extra throughput and efficiency than the MI300x, and administration stated on the first-quarter earnings name that buyer curiosity is “very sturdy.” Oracle is already in line to deploy a large-scale cluster powered by MI355x accelerators for AI workloads.
AMD reported a 36% year-over-year enhance in income within the first quarter, accelerating from a 24% enhance within the fourth quarter of 2024. The momentum is catching buyers’ consideration heading into the corporate’s upcoming Advancing AI occasion, the place analysts predict it to announce new design wins and doubtlessly new prospects for its GPUs.
Throughout the first-quarter earnings name, administration famous constructive buyer suggestions and plans for broader deployments for its MI400 chip, which is being launched in 2026. Even with the danger that chip export controls would possibly strain income, CEO Lisa Su would not see China chip restrictions altering AMD’s long-term addressable market, which is estimated at $500 billion.
AMD is on observe to complete 2025 on a excessive be aware. The consensus analyst estimate has earnings per share rising 20% in 2025 earlier than surging 44% in 2026, in response to Yahoo! Finance. Given this expectation, the inventory’s ahead price-to-earnings a number of of 31 may help extra positive factors within the close to time period.
Picture supply: Amazon.
2. Amazon
Shares of Amazon have rebounded 42% from their 52-week low of $151.76. With analyst estimates calling for file earnings in 2025 and 2026, the inventory may very well be able to hit new highs within the second half of the yr.
The corporate reported a 62% year-over-year enhance in earnings within the first quarter. Its rising use of robotics throughout its success community is beginning to achieve consideration on Wall Road that might ship its inventory larger within the second half of 2025.
There isn’t any retailer extra invested in robotics than Amazon. Because it acquired robotics firm Kiva Methods in 2012, Amazon has continued to lean into this expertise to enhance supply speeds and effectivity.
It has the most important fleet of business robots, with over 750,000 throughout its success community. This expertise is getting very refined, and it makes use of several types of robots for numerous duties. For instance, its Vulcan robotic is aware of how a lot drive to use to an object to keep away from damaging it.
Amazon says it has a number of initiatives underway to enhance its price construction. It’s reportedly testing using humanoid robots for carrying packages from the supply van to a buyer’s door. This may very well be very useful to margins in the long term, because the final mile sometimes accounts for over half of complete transport prices.
With AI and robotics getting extra superior yearly, now’s the time to purchase Amazon inventory. Robots are solely going to get extra succesful within the coming years, which is able to enhance the variety of duties they’ll deal with within the firm’s success facilities. This spells large productiveness positive factors and margin enchancment that’s not mirrored within the inventory’s present valuation.
The shares are buying and selling at 35 instances 2025 earnings estimates, which appears to be like very cheap contemplating the strong earnings development over the previous yr and alternatives for larger margins over the long run. As Wall Road continues to concentrate to Amazon’s alternative in robotics, the inventory may climb larger.
John Mackey, former CEO of Complete Meals Market, an Amazon subsidiary, is a member of The Motley Idiot’s board of administrators. John Ballard has positions in Superior Micro Gadgets and Nvidia. The Motley Idiot has positions in and recommends Superior Micro Gadgets, Amazon, and Nvidia. The Motley Idiot has a disclosure coverage.
