Invest With Companies Leading Market Trends

This year, the stock market may have had its rally almost entirely thanks to the interest in AI. It’s pushed many big-cap tech stocks higher. Thanks to their high weighting, in turn, that’s helped stock indices rise.

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  • That trend may not be over, given the long-term opportunities as AI moves out of its early stages. If so, many companies that can benefit from the trend may be a long-term buy as the market moves out of correction mode.

    One example is with chipmaker Advanced Micro Devices (AMD). The company provided weak guidance on its AI chips, but shares soared anyway.

    Meanwhile, they’re a leader in gaming chips, which will only continue to see growing demand in the years ahead. Earnings soared 323 percent in the past year, even as revenues only grew by 5 percent. With a stronger AI chip production down the line, AMD could be in for further big wins.

    Shares trade for 24 times earnings, a reasonable valuation in the chipmaking space right now, especially compared to big names like Nvidia (NVDA).

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  • Action to take: Shares still remain about 20 percent off their 52-week high, but are trending higher once again. Both long-term investors and momentum investors may like shares here.

    For traders, the January 2025 $125 calls, last going for about $3.05, could see mid-double-digit gains or higher on a further trend higher for shares in the months ahead.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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