Prediction: These AI chip stocks could soar in September (Hint: They are neither Nvidia nor Broadcom)

SourceMotley_fool

3 Sept 2025 14:15

Key Points

• AMD is emerging as a prominent player in AI inference with its Instinct MI350 series.

• Ambarella is gaining momentum in edge AI and is rapidly entering new markets.

• 10 stocks we like more than Advanced Micro Devices ›

Global semiconductor revenue will reach $$705 billion by 2025, according to Gartner, as demand for chips for artificial intelligence $(AI$) and high-performance computing surges in data centers and edge devices. While certain giants dominate the headlines in the AI chip market, there are other players better positioned to take advantage of this wave in September.

Here are two AI chip stocks with short-term catalysts and strong long-term potential that investors should watch.

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Image source: Getty Images.

Advanced Micro Devices

Advanced Micro Devices(NASDAQ: AMD) is rapidly emerging as a leader in the AI chip market. The company plans to showcase its progress at two key events for investors.

Chief Financial Officer Jean Hu will present at Citi's Global TMT Conference on September 3, and Data Center Chief Forrest Norrod will speak at Goldman Sachs' Communacopia & Technology Conference on September 8. These events could clarify AMD's accelerated role in the AI infrastructure market and act as a catalyst for gains in its stock price in September 2025.

AMD's impressive financial performance in the second quarter supports this expectation. Revenues increased by 32% year-over-year to $7.7 billion, driven by record sales of EPYC CPUs for servers and Ryzen processors. The company generated a record free cash flow of $1.2 billion, despite an inventory write-down of $800 million resulting from U.S. restrictions on the export of Instinct MI308 chips to China.

Despite this, the data center remains the main revenue driver, with a 14% year-over-year increase to $3.2 billion, driven by the rapid adoption of fifth-generation EPYC CPUs by both cloud and enterprise customers.

The growing enthusiasm for the next-generation AI accelerators MI350 could be an important short-term catalyst. While the Instinct MI300 and MI325 accelerators continued to gain traction in the second quarter, the recently launched Instinct MI350/355 series began volume production ahead of schedule in June 2025.

The company highlighted that its MI355 chips ( within the MI350 family ) match or exceed the B200 chips based on Nvidia's Blackwell architecture, especially in AI inference workloads, at a significantly lower cost. Since rising costs are a major hurdle for data centers, this apparent cost advantage could be a key differentiator for the Instinct MI350 series.

With 7 of the top 10 AI model creators now using Instinct GPUs, AMD's credibility in the AI computing market is increasing dramatically. Thanks to its cutting-edge inference performance, AMD is also rapidly advancing in the sovereign AI market, as evidenced by the multimillion-dollar HUMAIN agreement with Saudi Arabia.

At 42 times future earnings, AMD's shares are not cheap. However, the combination of strong finances, increasing AI adoption, and highly anticipated updates for investors in September suggests that the stock could gain significant momentum in the short term.

Ambarella

Previously known mainly for its video and image chips, Ambarella(NASDAQ: AMBA) has emerged as a prominent player in the edge AI market. Its patented CVflow architecture combines traditional computer vision algorithms with neural network techniques in a single system on chip (SoC). Ambarella is leveraging this hybrid AI approach to drive applications across various edge scenarios in areas such as security, robotics, and automotive systems.

The recent financial performance of the company highlights its commercial momentum. In the second quarter of its fiscal year 2026 ending July 31, 2025, Ambarella's revenue increased by 49.9% year-over-year to $95.5 million, surpassing projections. The non-GAAP earnings per share of $0.15 also exceeded estimates by $0.10.

Edge AI now accounts for approximately 80% of total revenue. 5-nanometer AI SoCs are in high demand for edge AI applications, including smart homes, automotive security, and enterprise security. The company is also rapidly expanding into new markets, including wearable video, robotic aerial drones, and edge AI infrastructure.

Ambarella has already shipped over 36 million edge AI processors to hundreds of customers, enabling them to port and run advanced AI models directly on Ambarella's SoCs. Customers like Insta360, Honeywell, and Samsara are already designing AI video products around Ambarella chips, validating their competitive advantage.

At more than 162 times future earnings, Ambarella is not a cheap stock. However, with rapidly improving revenue performance and a differentiated hybrid AI strategy, the stock seems to be in an early growth stage. It could continue its upward momentum in September and beyond.

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