Buy AMD Stock for Its Long-Term Growth Potential

I have said this in the past and will say it again, tech stocks are hot picks and will continue to remain at the top for the rest of 2021. Advanced Micro Devices (NASDAQ:AMD) has proved its worth time and again. It has enjoyed a strong couple of years and is enjoying the momentum. AMD stock hit an all-time high a few days into August and is known for making solid upside in a short period.

However, it has come under pressure lately and is showing volatility. After hitting an all-time high of $122.49, AMD stock has dipped beneath $100 multiple times in recent days, opening on Aug. 8 at $106.55. There is plenty of upside potential for AMD stock and adding it to your portfolio is a smart decision. Let’s take a look at my bullish thesis on AMD stock.

AMD Offers Enhanced User Experiences

AMD and Microsoft (NASDAQ:MSFT) recently enabled new user experiences through Windows 11. Both are top tech companies that offer outstanding products and experiences. AMD CPUs are now compatible with Windows 11, the newest version of Microsoft’s operating system, to ensure optimum user experience. With its new Ryzen processors, the company is offering users a wider choice.

There’s more good news for gamers. AMD Radeon GPUs have also been tuned to deliver outstanding performance and an exceptional gaming experience on the new operating system.

The company already enjoys a stronghold in the industry for its gaming chips. It has set a gold standard for chips and designed the chips for Microsoft’s Xbox Series S and Series X consoles and Sony’s (NYSE:SONY) PlayStation 5. There is a massive demand for gaming consoles, which has led to a shortage in supply for both companies. The demand is going to continue into the first half of 2022, and this will ensure that AMD chips are in demand too. Despite the chip shortage, the company managed to report impressive Q2 numbers.

High Growth at Cheaper Valuation

AMD is a high-growth company and is currently trading at a discount. Considering the fact that AMD is a top growth stock and its revenue and growth are expected to hit new highs in the coming years, the current level is a good entry point. Analysts expect earnings to grow significantly over the next several years. Until the chip supply reaches the level necessary to fulfill the demand, AMD has the capacity to boom.

For the third quarter, AMD expects the revenue to hit $4.1 billion, which would be a 46% rise year-over-year. For the full year, the company expects revenue growth of 60%, which is up from the prior guidance of 50%. The company has already enjoyed two full quarters of strong revenue and growth. I believe this will continue for the third quarter.

The Bottom Line on AMD Stock

A major reason to invest in AMD is its presence across many fields. The company does not stick to a particular industry. Its chips are relevant to various sectors including data centers, AI and cryptocurrency.

Out of 15 analysts on TipRanks, 11 have a “buy” rating with an average price target of $116.21. AMD will continue to expand over the coming years and it is on its way to grab a larger market share in the CPU and GPU segments. With unique products and faster chips, it is here to change the way users engage in gaming.

I have always said that AMD stock is a good bet and one to hold for the long term. The company has immense growth potential and even a pandemic could not slow its growth momentum. It can reap strong results for investors. AMD has the ability to conquer the industry with its technology.

Any dip in the stock is a good chance to buy because it will certainly go up in the coming months.

On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis.