1 Growth Stock Down 38%, Buy Now

Gaming revenue fell 69% year over year as Microsoft and Sony reduced channel inventory for their video game consoles. However, gaming is another market that will see better days once consumer spending recovers. Nvidia saw strong growth in its gaming business last quarter, so a recovery in gaming could be underway.

Based on the strength of its data center and customer businesses, which accounted for 79% of the company’s revenue last quarter, AMD stock is a solid buy after the recent decline.

Of course, there’s always the risk that AMD’s growth will slow if data center revenue declines faster than expected. However, if you buy stocks with the intention of holding them for at least five years, there’s a good chance you’ll get a high return. The semiconductor industry has grown over the past few decades and is expected to continue to do so as new devices and AI-powered software drive demand for more powerful chips.

AMD has established itself as an industry leader and gained market share Intel in the server CPU market. The stock’s forward price-to-earnings ratio of 27 based on next year’s earnings estimate already factors in weak results in the non-data center segments and should allow investors to capture excellent returns in 2025 and beyond, especially when embedded and Gaming will soon be back on track for growth.

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Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. John Ballard holds positions in Advanced Micro Devices, Meta Platforms and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, Meta Platforms, Microsoft, Netflix, Nvidia, Salesforce, and Uber Technologies. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft, short February 2025 $27 calls on Intel, and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

1 Growth Stock Down 38% to Buy Right Now was originally published by The Motley Fool