AMD has a big opportunity not just with GPUs, but with CPUs as well.
Amazon is poised to see accelerating cloud computing growth, while its e-commerce business is seeing great operating leverage.
If you've got $1,000 to invest, I think two stocks trading right around $200 a share look quite attractive. With that amount of money, you'd be able to buy five shares of one stock or split it up between the two. Let's look at two solid options to buy right now.
Advanced Micro Devices (NASDAQ: AMD) has made waves recently, making two large deals to supply its graphics processing units (GPUs) to OpenAI and Meta Platforms. Both companies have agreed to purchase 6 gigawatts' worth of its artificial intelligence (AI) accelerators in data center infrastructure-related deals estimated to be worth more than $100 billion each.
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In return, AMD has agreed to offer both companies warrants in its stock based on deployment and its stock hitting a certain threshold price. While some have argued against AMD giving away warrants, this deal gets its foot in the door with two of the largest hyperscalers (owners of massive data centers) and incentivizes them to help boost its share price. Perhaps more importantly, it also sets it up to become a preferred supplier of data center central processing units (CPUs) to both companies.
AMD is already the market leader in data center CPUs, but with this market set to explode as AI agent adoption increases, Nvidia is also looking to become a major player. AMD's deals with OpenAI and Meta are both offensive and defensive maneuvers that should position it for very strong growth in the years ahead.
Another stock benefiting from AI is Amazon (NASDAQ: AMZN). The company is the cloud computing market share leader, and it is seeing its revenue growth accelerate as the need for compute and AI services skyrockets. Meanwhile, the company is looking to lean more into its own custom AI chips and potentially put more effort into creating a world-class AI model, given the cost advantage its custom AI chips give it. This is a big opportunity not priced into the stock.
At the same time, Amazon has been at the forefront of using both AI and robotics in its e-commerce operations to drive efficiencies and operating leverage. This could be seen last quarter, as its North American e-commerce operating income jumped 24% on a 10% climb in sales. The company is the largest maker of robots in the world, and it has over 1 million of these robots moving products around its fulfillment centers, all coordinated by its DeepFleet AI model. That's a big efficiency advantage in its e-commerce operations that will likely grow over time.
Between the acceleration of its cloud computing revenue growth and the operational efficiency gains in its e-commerce business, Amazon is a great stock to buy right now.
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Geoffrey Seiler has positions in Amazon and Meta Platforms. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.