Investing in semiconductor stocks has generally been a good move for investors of late. In the past three years, the VanEck Semiconductor ETF has risen by just around 80%, which is a far more impressive performance than the S&P 500 and its 38% gains over that time frame.

One chipmaker that has been an underwhelming investment, however, is Advanced Micro Devices (AMD 0.35%), also known as AMD. While the market has been rallying and chip stocks have been hot buys, AMD stock is down around 10% over the past three years. Its lackluster growth simply hasn't given investors a reason to be too excited with its results and future prospects.

But if its CEO is correct and the company is on the cusp of some significant growth, buying the tech stock today could result in some fantastic returns for investors in the not-too-distant future.

AMD expects strong growth in the years ahead

A quick look at AMD's growth rate in recent quarters leaves little wonder as to why the stock hasn't been taking off. While sales have been picking up of late, the trend hasn't always been a strong one for the chipmaker.

AMD Operating Revenue (Quarterly YoY Growth) data by YCharts

While other companies involved with artificial intelligence (AI) have been experiencing strong sales growth, it hasn't been a smooth ride for AMD, to say the least. Its growth rate did, however, accelerate to 24% during the last three months of 2024, and it forecasts that for the current quarter, its year-over-year growth rate will rise again to 30%.

The company does appear to be on the right track, and CEO Lisa Su believes that even more growth is on the horizon for the business and that it's "on a steep long-term growth trajectory, led by the rapid scaling of our data center AI franchise from more than $5 billion of revenue in 2024 to tens of billions of dollars of annual revenue over the coming years."

If AMD generates "tens of billions" in revenue, that would mean a sharp acceleration in its growth, as this past year, its top line rose by 14% to $25.8 billion. If Su's projection turns out to be true, that implies that AMD may double its revenue. And if that happens, that could surely be the catalyst the stock needs to get going. While sales have been rising for AMD, the growth rate hasn't been all that explosive for the business thus far.

There are still some important question marks

Su's forecast sounds promising, but investors should be careful not to set their expectations too high. After all, there are concerns that economic conditions may slow, especially with the potential for tariffs and trade wars to weigh on many businesses.

Plus, even if AMD generates significant revenue growth, its bottom line will also need to show considerable improvement to make the stock a good buy. AMD's profit margin is around just 6%, and it trades at a price-to-earnings multiple of around 110. Those margins will need to improve and the company will need to generate strong growth for it to prove to be a good long-term buy and for that earnings multiple to come down.

Is AMD stock a good buy today?

AMD is one of the top chipmakers in the world, and while the stock hasn't been doing well of late, a rally could be coming, especially as its growth rate improves. Investors should always take a glowing guidance from a CEO with a grain of salt, as they'll often be bullish on their businesses, no matter what the circumstances are. But with many growth opportunities in AI, AMD could indeed make for a good stock to buy right now, as it launched its latest AI chip (Instinct MI325X) in October, and stronger sales and profit numbers could follow in the quarters ahead.

Although its recent performance hasn't been impressive, if you're willing to be patient, this could make for an underrated stock to buy and hold.