Starting lines matter. Advanced Micro Devices (AMD 0.31%) has been one of the market's biggest winners since early April's tech sell-off, more than doubling since its springtime bottom. However, the stock is also currently trading at 5% lower than it was a year ago.

There are some legitimate reasons for concern, but the prognosis remains bullish for the maker of central processing units (CPUs), graphics processing units (GPUs), and other types of microprocessors. Let's go over the good and the bad when it comes to AMD. You need to look at both sides to determine whether investing in AMD could be your ticket to becoming a millionaire.

1. The bullish case for AMD

The rally in AMD is understandable. Demand for generative artificial intelligence (AI) is booming, and AMD is there to provide the chip solutions for data centers to crank out the resource-intensive query results. It's not the leader in this space. Nvidia (NVDA 2.54%) takes that crown. However, there is room for more than one winner in this seismic tech evolution.

AMD's business is picking up. It delivered several quarters of accelerating revenue growth before Chinese trading restrictions kicked in during the spring this year.

  • Q1 2024: 2%
  • Q2 2024: 9%
  • Q3 2024: 18%
  • Q4 2024: 24%
  • Q1 2025: 36%
  • Q2 2025: 32%

Investors shouldn't feel discouraged by the top-line deceleration. The U.S. restricting sales of AMD's Instinct MI308 data center GPU chips in China resulted in an $800 million hit in inventory-related charges in the second quarter. The lack of sales left a substantial dent on the $7.7 billion revenue it ultimately recorded for the quarter. Top-line growth would've accelerated for the fifth consecutive quarter if the export controls weren't in place.

The collateral damage from the trade war also hurt AMD's bottom line. AMD's adjusted gross margin of 43% would've been roughly 54% without the charge. Its adjusted operating profit tumbled 29% to $897 million, with AMD's adjusted earnings sliding 30% to $0.48 a share. However, it was still in line with analyst expectations.

Despite what should hopefully be a temporary results-sapping situation, AMD is probably cheaper than you think. It is trading for less than 27 times next year's profit target, a reasonable price given its recent growth rate early in the AI revolution. You could've bought AMD for less than 13 times 2026 earnings at the April bottom, but we're here now. It doesn't mean that you're late.

AMD's forward revenue multiple of 6.4 may seem high for a cyclical semiconductor stock, but you would be cheating the chipmakers if you assume AI is a fad. There should be strong demand for the buildout of data centers for several more years.

Someone checking server racks inn data centers.

Image source: Getty Images.

2. The bearish case against AMD

Nvidia is the rock star in this space, trading at a lofty 15.8 times next fiscal year's revenue target. However, it's fetching only 28 times next year's earnings, barely a premium over AMD's forward earnings valuation. This is a testament to Nvidia's stronger margins, but it has also grown at a faster clip than AMD. There's a reason Nvidia commands the country's largest market cap.

Another knock on AMD -- and it applies to Nvidia as well -- is that the trade war is taking its toll in a few ways. When Nvidia and AMD agreed this summer to hand over 15% of their sales to China in order to lift export controls, the market cheered the news. The rub is that it takes two to tango. China isn't ready to open the floodgates, and homegrown companies are working on solutions to fuel that nation's AI game plan.

AMD can survive without China. After all, it just posted 32% revenue growth in its latest quarter, and that was with the now-absent Chinese AI chip sales padding the prior year's report.

The stock may have soared 108% since its April low, but new uncertainties in the trade standoff that are beyond its control have emerged. It's still a stock with serious upside, especially as headwinds become tailwinds. Nvidia may be the shiny choice, but what happens as the margin gap closes between the two companies? On its own, AMD has a long trajectory of growth, even before the China situation sorts itself out. There are no guarantees when it comes to investing, but AMD seems to have a good shot at being your ticket to becoming a millionaire.