At ~US$473/share, $AMD is an aggressive growth story, but the valuation is also considerably rich. The most recent quarter was excellent: revenue +50% YoY to $11.5B, while non-GAAP EPS jumped 246% to $1.66. Data Center revenue more than doubled and represented 58% of total revenue. AMD has a legitimate opportunity to take more of the accelerator market from Nvidia while simultaneously growing its EPYC server CPU business (which is where it dominates). Management expects Q3 revenue around $13B, +41% YoY, with Data Center growth accelerating in the second half. The really interesting number is analyst consensus for FY27 EPS around $15.1, roughly double FY26’s ~$7.6 estimate. If AMD actually gets anywhere close to that, today’s valuation starts looking much more reasonable. Biggest AMD threats Nvidia: AMD needs to keep taking AI chip market share. High valuation: A slowdown in growth or AI spending could cause a big stock drop. Big customers: Companies like Microsoft and Meta have huge negotiating power and are developing their own AI chips. China restrictions: U.S. export rules could limit AMD’s ability to sell AI chips in China. I’d be much more interested in AMD if I believed the ~$15 FY27 EPS estimate is achievable. At today’s price, you’re essentially paying upfront for a lot of future AI success. I am rating AMD a HOLD. I will look to sell a share or two if we go back up to $500+ but I’m not looking to sell all of my position anytime soon.
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