<div id="readability-page-1"><p>Throughout her tenure as CEO and chief investment officer of Ark Invest, Cathie Wood earned her reputation as an investor by making big bets on emerging technology themes. Some of Ark's largest positions are in high-growth, and arguably speculative names such as <strong>Tesla</strong>, <strong>Coinbase</strong>, <strong>Palantir Technologies</strong>, and <strong>Archer Aviation</strong>.</p> <p>While the companies above are each disruptive in their own right and stand to benefit from the prospects of artificial intelligence (AI), none trade for a particularly bargain valuation. Instead, recent buying activity at Ark suggests Wood has her eyes on the AI chip market. Yet, interestingly, the savvy investor seems to be interested in an alternative opportunity to chip all-star <strong>Nvidia</strong>.</p> <p>Between April 22 and May 1, Wood scooped up more than 212,000 shares of <strong>Advanced Micro Devices</strong> <span>(AMD<span> 1.14%</span>)</span>. Let's explore what may have influenced this decision and assess why now looks like a lucrative time for investors to follow Wood's lead.</p>  <h2>AMD is making serious moves in the data center space</h2> <p>When it comes to semiconductors and data centers, Nvidia is widely seen by investors and Wall Street analysts as the undeniable market leader. Considering that industry estimates suggest that Nvidia has amassed more than 90% of the market share, it's hard to deny just how dominant the company is.</p> <p>Nevertheless, AMD has quietly built a respectable data center business of its own, and I think that is playing a big role in Wood's decision to buy the stock. In the table below, I've summarized AMD's financial results for its data center segment over the last year.</p> <div><table> <tbody> <tr> <th scope="col">Category</th> <th scope="col">Q1 2024</th> <th scope="col">Q2 2024</th> <th scope="col">Q3 2024</th> <th scope="col">Q4 2024</th> <th scope="col">Q1 2025</th> </tr> <tr> <td>Data Center Revenue (in billions)</td> <td>$2.3</td> <td>$2.8</td> <td>$3.5</td> <td>$3.8</td> <td>$3.7</td> </tr> <tr> <td>Data Center Operating Income (in millions)</td> <td>$541</td> <td>$743</td> <td>$1,000</td> <td>$1,100</td> <td>$932</td> </tr> <tr> <td>Data Center Operating Income Margin</td> <td>22%</td> <td>25%</td> <td>28%</td> <td>29%</td> <td>24%</td> </tr> </tbody> </table></div> <p>Data source: Investor Relations.</p> <p>On a quarter-to-quarter basis, this financial picture may look a tad lumpy. Keep in mind that the semiconductor industry is highly cyclical, so it's to be expected that companies such as AMD will experience more pronounced levels of demand from time to time. The more important theme here is that AMD's data center business is accelerating sales while widening its operating margins.</p> <div><p><img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MTc1NDMvZ2V0dHlpbWFnZXMtMTQ4MjI0NjUxMC0yLmpwZyZ3PTcwMA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="393" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MTc1NDMvZ2V0dHlpbWFnZXMtMTQ4MjI0NjUxMC0yLmpwZyZ3PTcwMA"/></p><p>Image source: Getty Images.</p> </div> <h2>The company's growth acceleration is just beginning</h2> <p>Last year, Nvidia generated upwards of $115 billion in revenue just from the data center business. Given its size relative to AMD, you might think that Nvidia's lead is insurmountable. However, the next few years are going to be quite interesting in the chip space.</p> <p>Cloud hyperscalers <strong>Microsoft</strong>, <strong>Alphabet</strong>, and <strong>Amazon</strong> are all developing their own lines of in-house chips. Furthermore, social media and metaverse behemoth <strong>Meta Platforms</strong> is joining its &#34;Magnificent Seven&#34; peers by building its own chips, too. Each of these companies is believed to be major customers of Nvidia, and so the introduction of new chips to the semiconductor market could pose as a serious headwind to the company's growth.</p> <p>On the flip side, AMD is already working with Meta Platforms, Microsoft, and <strong>Oracle</strong> in the data center space -- each of which is deploying AMD's MI300X accelerators. To make things even more interesting, AMD already has a line of successor architectures, with the new MI350 GPU scheduled to make a splash later this year.</p> <h2><span>Is AMD stock a buy right now?</span></h2> <p>Year to date, shares of AMD have plummeted by some 37%. I think a big reason for the sell-off is that most growth investors are viewing the AI chip opportunity through a binary lens. In other words, you're either all-in on Nvidia or you think AMD may surpass its rival.</p> <p>I don't personally see things this way. Despite the introduction of both direct and tangential competition, Nvidia will likely continue to be a critical player in the AI infrastructure space for the long run. However, this does not mean that investors should look the other way when it comes to AMD.</p> <p>AMD may never become as large as Nvidia, and that is OK. Right now, AMD stock trades at a modest forward price-to-earnings (P/E) multiple of just 22.4. If the downward trend in AMD's forward P/E suggests anything, it's that investors aren't overly optimistic about the company's future.</p> <p><img src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/c14e5e94ee7d3186425c13fc87ec1bea.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="720" height="441" original-src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/c14e5e94ee7d3186425c13fc87ec1bea.png"/></p> <p>AMD PE Ratio (Forward) data by YCharts</p> <p>In my eyes, it's not about AMD building a data center business of the same size or footprint as Nvidia. Rather, the bigger idea is whether or not AMD can scale its current GPU business and do so in a profitable way. If the financial profile above, combined with AMD's notable customer wins, serves as any indication, I'm optimistic that the company's new chipsets should experience strong demand and help fuel robust growth for AMD.</p> <p>To me, Wood is making a smart decision to pounce on AMD stock at its current price point. I think investors with a long-term time horizon should consider adding AMD to their AI portfolio.</p>                                                                            </div>

<p>Cathie Wood, CEO of Ark Invest, has recently purchased over 212,000 shares of Advanced Micro Devices (AMD), indicating her interest in the AI chip market. Despite Nvidia's dominance in the data center space, AMD is experiencing growth in its data center business, with increasing revenue and operating margins. While AMD's stock has fallen 37% this year, it trades at a forward P/E of 22.4, suggesting potential value for investors. Wood's investment reflects a belief in AMD's ability to scale its GPU business profitably, despite competition from Nvidia and others.</p>

- Cathie Wood, CEO of Ark Invest, has made significant investments in emerging technology, recently acquiring over 212,000 shares of Advanced Micro Devices (AMD).  
- AMD is expanding its data center business, showing growth in revenue and operating margins, while competing against Nvidia, which dominates the market.  
- Despite AMD's stock decline, the potential for growth in its GPU business and partnerships with major companies suggests it could be a valuable addition to an AI-focused investment portfolio.

Cathie Wood Goes Bargain Hunting. 1 Dirt Cheap Artificial Intelligence (AI) Chip Stock She Just Bought (Hint: It's Not Nvidia)