Motley Fool: A promising chip company

Like Nvidia, Advanced Micro Devices (Nasdaq: AMD) designs and markets semiconductor chips, such as central processing units (CPUs) and graphics accelerator cards. It has several notable brands under its umbrella, including Ryzen CPUs, Epyc CPUs and the Instinct GPU (graphics processing unit) line for data centers and cloud servers.

AMD’s main products were historically known as a cheaper alternative to Intel CPUs, and for years, it operated in Intel’s shadow. But as Nvidia’s Blackwell GPUs began to fly off the shelves to meet the rapidly growing demand for artificial intelligence, customers like OpenAI began looking for alternatives to meet their internal needs, and AMD’s Instinct AI accelerators stepped in to fill that gap.

For the fourth quarter of 2025, AMD reported that revenue grew 34% year over year to $10.3 billion. These excellent results showed that use of AMD’s AI offerings (data center and consumer-grade chips) has been increasing across the board.

AMD still has a significant growth runway. The AI chip market is expected to grow at a compound annual growth rate of 15.7% and reach nearly $565 billion by 2032. That means, despite Nvidia keeping a big chunk of that pie, there’s still plenty of room for other companies to grow as well. (The Motley Fool owns shares of and recommends Advanced Micro Devices and Nvidia.)

Ask the fool

Q. What long-term returns should I expect of the stock market? – S.B., Sitka, Alaska

A. You shouldn’t expect any specific return, as no one knows how the stock market will perform from day to day or year to year. (Its overall direction has always been up, though, despite plenty of occasional downturns, both big and small.)

However, you can look at historic returns to guide your expectations: Over the past 75 years (as of the end of January), the market, as measured by the S&P 500 index of 500 of America’s biggest companies, has averaged annual gains of 8%. With dividends reinvested along the way, that average rises to 11%. The averages for the past 10, 25 and 50 years were respectively 14%, 7% and 9%, with reinvested returns being higher.

It’s reasonable to hope for double-digit average gains over your investing period, but don’t count on them. Note, too, that the returns above are “nominal,” meaning they ignore the existence of inflation. To estimate “real” returns, which do factor it in, subtract the rate of inflation, which has historically averaged around 3% annually. That would turn a 10% nominal gain into a real gain of around 7%.

Q. What’s the “closing tick?” – V.S., Greensburg, Pennsylvania

A. It’s the difference between the number of stocks that closed on an “uptick ” (that is, with their last trade occurring at a higher price than the previous one) and the number that closed on a “downtick.” If you invest for the long term, as we recommend, it won’t be a meaningful measure and you can feel free to ignore it.

My smartest investment

My smartest investment? Well, in 1971, just before President Nixon ended the gold standard, my father bought a plastic sleeve of South African Krugerrands. I think he got a dozen for around $35 each. The clerk at the store where he bought them encouraged my father to buy more, but he didn’t. Too bad for me! They sit safely in a safe deposit box, but with gold now trading at close to $5,000 per ounce, that’s a stratospheric return on investment! – N.S., San Diego

The Fool Responds: It is indeed. A Krugerrand contains an ounce of gold, so your 12 coins are now worth around $60,000. Gold hasn’t always been a great investment, though. As Wharton business school professor Jeremy Siegel noted in his book “Stocks for the Long Run,” an investment in gold between 1946 and 2021 would have averaged annual real gains of just 1.6%. Between 1982 and 1999, it would have averaged an annual real loss of 4.9%. How an investment in gold will perform depends on which years you hold it, and no one knows how it will do from year to year. It’s the same with stocks, but stocks are generally tied to growing businesses and not just to the value of a metal.

(Do you have a smart or regrettable investment move to share with us? Email it to TMFShare@ fool.com.)