Lisa Su became CEO of Advanced Micro Devices (AMD 1.14%) in 2014. During that time, AMD faced an uncertain future, and many investors believed it was going bankrupt.
However, semiconductors typically take three to five years to develop, and knowing that, Su forged a new path for the company soon after taking the helm. By 2018, AMD emerged from penny stock status, and a bull market in the stock would take the company's stock to massive gains in subsequent years.
AMD's growth since 2018
If an investor bought $10,000 worth of AMD stock on the first trading day of 2018, that shareholder would have approximately $100,000 today.
At that point, the semiconductor stock had risen to just over $10 per share. However, that leads to the question of why we are not measuring AMD's growth from 2015 when the stock had fallen below $2 per share at various times.
The short answer comes down to much lower risks. As mentioned before, bankruptcy was a serious risk for AMD in 2015. At the time, Intel dominated the PC market. Also, while Su had decided to focus exclusively on CPUs and GPUs, her strategy was unproven at that point, meaning a $10,000 investment could have easily fallen to zero.
Three years later, Su had averted the bankruptcy scenario. Thus, it had grown to the point that a prospective shareholder might feel more comfortable investing $10,000.
How AMD turned itself around
Also, by 2018, the products that began development under Su's tenure had finally made it to the marketplace. In 2017, AMD released its first Ryzen and Epyc processors. With those chips, it began to capture parts of the CPU and GPU markets, making it a major competitor in the data center and gaming spaces.
Today, AMD has taken increasing data center market share from Intel, which once dominated that space. In gaming, the company now provides the chips powering the Microsoft Xbox and Sony's PlayStation consoles.
Also, with the acquisition of Xilinx, AMD dramatically increased its presence in the embedded space. It was AMD's only segment to achieve positive revenue growth in the second quarter of 2023 and should serve as a source of profitability in the long term.
More recently, it has also embraced AI with the release of its MI300X chip. Admittedly, it is behind Nvidia in this area, but its past successes make it likely to emerge as a major provider of chips for artificial intelligence.
The state of AMD
AMD's recovery has hugely profited investors, even ones that waited until 2018 when the threat of bankruptcy had abated. While returns could have been higher if buying at the bottom in 2015, the price action since 2018 shows investors can invest in a potential 10-bagger without taking on excessive risks.
Moreover, AMD continues to succeed in numerous segments of the semiconductor industry. This likely means that its growth story is far from done. Even if investors waited until now to buy, AMD's successes in gaming, data centers, embedded chips, and possibly other segments could enrich them for years to come.
