Advanced Micro Devices (AMD +3.50%) and Symbotic (SYM +0.45%) have both posted explosive stock performance over the past year. Their share prices are up 130% and 180%, respectively, as of this writing, and both look poised to see long-term benefits from the rise of artificial intelligence (AI).
While AMD has made big gains thanks to excitement surrounding the company's opportunities in providing semiconductors to power AI, Symbotic has seen its share price rocket higher thanks to strong sales growth and interest in its robotics tech. Which of these leading players in next-generation technology trends is the better buy for investors at today's prices?
NASDAQ: AMD
Key Data Points
Advanced Micro Devices could experience a boom
Parkev Tatevosian (AMD): Investors looking to capitalize on the growth of artificial intelligence have an excellent choice in Advanced Micro Devices. The company has done a solid job growing revenue and profitability in the previous decade and is selling at a reasonable valuation.
AMD's revenue jumped from $5.3 billion in 2013 to $23.6 billion in 2022. Given the increase in demand for CPUs and GPUs due to increased use of artificial intelligence, it would not be surprising to see AMD's revenue continue expanding. Importantly for investors, AMD has demonstrated economies of scale. As its revenue increased, so did its operating income. From 2013 to 2022, AMD's operating income increased from $89 million to $1.3 billion.
AMD's stock price looks reasonable.
AMD PE Ratio (Forward 1y) data by YCharts
Selling at a forward price-to-earnings ratio of 32, AMD's stock is fairly valued for a company with such excellent prospects. Unlike Nvidia, which has already experienced a boom in revenue, profit, and valuation from the forces unleashed by AI, AMD has yet to see a similar increase. That could be good news for investors looking to jump in now.
NASDAQ: SYM
Key Data Points
Symbotic is a smaller company with massive opportunities
Keith Noonan (Symbotic): Symbotic is a leading provider of AI-powered robotics technologies for warehouse and supply chain automation. Large businesses have opportunities to dramatically improve their profit margins by automating key parts of their operations, and this dynamic is translating into strong sales growth for the robotics specialist.
In its last fiscal year, which ended Sept. 30, revenue rose 98% to hit $1.8 billion. The company isn't profitable yet and posted a net loss of $208 million in the period, but its business is growing rapidly. As the company continues to ramp up and leverages economies of scale, I think there's a good chance it can shift into posting profits and regular earnings growth.
Crucially, Symbotic is still in the early stages of tapping into a massive market opportunity. There's already strong demand for the company's hardware, and the company will have opportunities to launch new industrial robotics technologies that address other automation needs and help drive sales growth. Advances in AI software should also help enhance the capabilities and market appeal of its machines.
Given that the business isn't profitable yet, Symbotic stock remains a somewhat speculative investment. On the other hand, the company is valued at under 2.2 times the average analyst estimate target for sales this year. With the business posting such explosive sales growth, that multiple actually looks quite reasonable given the robotics specialist's feasible path to profitability.
Additionally, the strength of the company's technologies and rapid sales growth make it a potential acquisition target. I think Symbotic has what it takes to be a winner if it continues flying solo, but the possibility of a buyout could help put a pricing floor on the stock or deliver sizable returns if an acquisition were to occur at a premium to today's price.
Sporting a market capitalization of roughly $3.8 billion, Symbotic stock is a compelling growth bet and still small enough to deliver explosive returns for investors who buy shares at today's prices.
Which stock is the better buy?
For investors seeking solid growth plays and balanced risk-reward profiles in established industries, AMD stock is the better buy. Similarly, investors who are more interested in owning semiconductor stocks than robotics stocks have an easy choice to make here.
On the other hand, investors who are willing to take on the elevated risk that comes with backing a younger player in a still nascent industry may find Symbotic to be the more suitable portfolio fit. Symbotic is certainly the riskier of these two stocks, but the combination of its smaller size and massive market opportunity could give way to explosive long-term performance.
AMD and Symbotic are both growth stocks in the tech sector. The two companies operate in different industry segments and are at different stages of business development. While AMD is a leading player in the semiconductor industry, Symbotic has a forefront position in the much younger industrial robotics space.
Both of these business segments look poised for expansion, and AMD and Symbotic each have strengths that could make them long-term winners. Depending on your portfolio goals and risk tolerance, owning both stocks could be the right move.
