Advanced micro devices (AMD -0.27%) seemed to fall out of favor on Wall Street in the first half of 2024, with the stock down 8% year-to-date. By comparison, chip rival NVIDIAShares rose 113% over the same period. Mediocre gains suggested AMD had yet to make significant progress in the artificial intelligence (AI) space, and a general decline in technology stocks drove the decline.

However, AMD released its second-quarter 2024 results on July 30, allowing the chipmaker to finally gain ground in the emerging industry. The company’s AI-focused data center segment posted record growth during the period, while central processing unit (CPU) revenue also rose.

As a result, AMD stock is an increasingly attractive investment. The company has a long history of growth, with its shares up nearly 5,000% over the past decade. At the same time, revenue and operating income have increased 312% and 169%, respectively. AMD is just at the beginning of its AI journey and could see big gains in the coming years as it expands.

So here is the ultimate growth stock you can buy now for $10,000.

AMD could have more room to maneuver than Nvidia

AMD and Nvidia are often compared; both are leading competitors in the chip market. Together, these companies cover almost the entire discrete graphics processing unit (GPU) sector and have a similar dominance in AI GPUs. However, their companies are at completely different stages of development, as evidenced by AMD’s market capitalization of $221 billion and Nvidia’s currently $2.6 trillion.

The difference could indicate huge growth potential for AMD as the company continues to make strides in artificial intelligence, an industry that will be worth $197 billion in 2023 and is expected to reach just under $2 trillion by the end of the decade. The AI ​​market is growing at a compound annual growth rate of 37%, suggesting there’s plenty of room for Nvidia to maintain its dominant market share and for AMD to carve out a lucrative role for itself.

Recent results show that AMD is doing just that. In the second quarter of 2024, the company’s data center segment saw revenue increase 115% year over year. At the same time, operating income increased 405% to $743 million. Total revenue for the quarter increased 9%, although gaming revenue fell 59%. The numbers represent a positive development in AMD’s business, as heavy investment in AI offsets losses in other business areas.

Gaming potential

Before interest in AI skyrocketed last year, AMD was best known for its role in gaming. For years, the company has had great success selling its GPUs and CPUs directly to consumers who use those chips to build powerful gaming PCs or powerful video editing setups.

The company continues to benefit from this sector thanks to increased CPU sales, as reflected in a 49% year-over-year increase in the customer segment. However, the gaming division, which includes revenue from GPU and semi-custom chip sales, is declining. The company attributes the declines mainly to lower semi-custom sales.

AMD’s largest semi-custom customers include Sony And Microsoftthat use these chips to power gaming consoles like the PlayStation 5 and Xbox Series X|S. Sales of these consoles are often cyclical, starting strong and usually declining until the next generation. Both of these consoles were launched in 2020, which could explain the lower chip sales for AMD.

However, a mid-generation console refresh could be imminent. Sony is reportedly working on a PlayStation 5 Pro and Microsoft is likely to follow suit. New consoles would likely boost AMD’s semi-custom chip sales and its gaming segment. Combined with positive growth in AI and CPUs, AMD has become a versatile company that could be worth investing in.

AMD shares are more valuable than you might think

AMD has struggled to gain investor support this year as it played catch-up in the artificial intelligence space. Heavy investments in generative technology and average earnings made the stock too expensive to consider. However, recent quarterly results have boosted the company’s value.

Data from YCharts

This chart shows that AMD’s price-to-earnings (P/E) and price-to-sales (P/S) ratios are below the company’s 12-month average for both metrics. The numbers suggest that AMD stock is trading at one of its best values ​​in months.

In addition to the enormous potential in the AI ​​space and encouraging earnings, AMD is an attractive stock to buy with $10,000 and hold for the long term.