Two Compelling Investments for Long-Term Portfolio Growth

Executive Overview

• Luxury automaker Ferrari combines exclusivity with operational excellence, delivering margins that far exceed traditional automotive standards.
• Advanced Micro Devices has positioned itself as a serious contender in the AI semiconductor space through its landmark OpenAI partnership.

The AI Semiconductor Revolution

The semiconductor industry is undergoing a fundamental transformation, and Advanced Micro Devices Inc. (NASDAQ: AMD) is capitalizing on this shift. Beyond its historical strength in central processing units and graphics processing units for personal computers and data centers, AMD has emerged as a credible alternative in artificial intelligence chip design.

The company’s recent collaboration with OpenAI represents a watershed moment. Under this agreement, AMD will supply computing infrastructure supporting up to 6 gigawatts of OpenAI’s AI systems, translating into tens of billions in annual revenue once the deployment commences in mid-2026. This partnership accomplishes two critical objectives: it validates AMD’s technical capabilities in emerging AI applications and demonstrates that the company is no longer merely chasing industry trends but actively shaping them.

The market has taken notice. Independent research firms have substantially upgraded their AMD valuations in response to this deal. Analyst projections for 2029 revenue have roughly doubled, now targeting approximately $42.2 billion compared to earlier forecasts around $20.7 billion. These revised estimates reflect confidence that AMD’s AI GPU revenue will experience significant expansion throughout the latter half of this decade.

Luxury Vehicles and Operating Efficiency

While technology dominates investment headlines, the automotive sector harbors an unexpected opportunity. Ferrari (NYSE: RACE) operates in a completely different business model than mass-market car manufacturers, and its financial performance reflects this distinction.

Over the past ten years, Ferrari’s share price has appreciated at roughly double the pace of the S&P 500, a remarkable achievement for any company. The foundation for this outperformance lies in Ferrari’s deliberate approach to production. The company maintains a scarcity model where annual output per model typically hovers around 1,000 units, creating persistent demand pressure that supports premium pricing. This strategy has enabled Ferrari to expand its total production by 88% over the past decade without diluting brand prestige.

The revenue composition reveals additional strategic advantages. Approximately 70% of Ferrari customers are repeat buyers—individuals returning to purchase additional vehicles for different use cases. This recurring purchaser base provides revenue stability comparable to subscription business models. Geographically, the company demonstrates diversification, with Europe, the Middle East, and Africa generating roughly 47% of sales, the Americas contributing 33%, and the remainder from Asia with minimal China exposure.

The company’s profitability metrics are exceptional. Ferrari’s operating margins dwarf those of conventional automotive manufacturers, and rather than compressing during competitive pressure, these margins continue expanding while competitors struggle. The company has achieved this through horizontal diversification—expanding model variety while maintaining production discipline—rather than vertical integration into more price-sensitive market segments.

Recent market turbulence offers perspective. A significant single-day decline occurred following Ferrari’s capital markets day announcement, where management raised 2025 guidance but provided 2030 guidance slightly below consensus expectations. While the stock trades at a premium valuation of 38 times earnings, this represents a temporary overreaction. The underlying business fundamentals remain robust, supported by decades of engineering excellence and brand equity.

Investment Thesis for the Long Term

These two companies represent distinct but complementary investment narratives for multi-decade holding periods. Ferrari embodies the intersection of heritage, craftsmanship, and disciplined capital allocation, resulting in business economics unavailable to conventional competitors. The company’s ability to expand production while enhancing margins demonstrates operational sophistication rare in any industry.

AMD exemplifies the opportunity to participate in technological transformation at scale. Rather than serving niche markets, the company is architecting solutions for one of the most consequential infrastructure transitions of our era. Its partnership validation signals that the firm has moved beyond emerging status into established player territory.

For investors evaluating long-term portfolio construction, both securities merit serious consideration as core holdings designed to compound wealth across decades rather than quarters.