Advanced Micro Devices (AMD) has had a choppy few weeks, with the stock sliding roughly 18% over the past month after a strong run in the past 3 months and year to date.
That pullback comes after a huge run, with AMD's 90 day share price return of about 33% and a 1 year total shareholder return above 66%. This suggests momentum is cooling, but the longer term growth story is still very much intact.
If AMD's recent swings have you rethinking your chip exposure, this could be a smart moment to explore high growth tech and AI stocks for other potential high growth names in the space.
With shares still trading at a steep discount to analyst targets despite powerful growth in data center and AI, are investors overlooking AMD's earnings potential, or is the market already factoring in every ounce of its future expansion?
Most Popular Narrative Narrative: 21.9% Undervalued
According to oscargarcia, the narrative fair value of $270 sits well above AMD's last close around $211, framing the stock as meaningfully discounted today.
AMD has evolved into a formidable player in AI and enterprise compute, propelled by leadership in CPUs (EPYC) and a growing presence in GPUs (Instinct MI series). With solid revenue and earnings growth, strong analyst upgrades, and a valuation that still looks reasonable compared to peers, AMD offers a balanced play on AI infrastructure growth.
However, that upside view faces real tests from Nvidia's entrenched AI lead and tightening export controls, which could pressure AMD's growth and margins.
Another Lens on Valuation
While the narrative suggests AMD is about 21.9% undervalued, its current price to earnings ratio of roughly 109.6 times stands far above the US semiconductor average of 37 times and a fair ratio of 64.3 times. This points to rich expectations that could easily be challenged if growth stumbles.