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Forbes
3 days ago
- Business
- Forbes
How AMD Stock Falls To $80
AMD stock (NASDAQ:AMD) has had a strong run this year so far, rising nearly 35% since early January, driven by recovering CPU demand and investor enthusiasm around generative AI. But with the stock now trading at a lofty 42x forward earnings, investors may want to pause and ask: how much of this valuation is justified, and how much is riding on high expectations? Here's the thing, a 50% drawdown from current levels would not be unprecedented. It happened in 2022, when AMD stock lost over 60% of its value in just a few quarters. With the stock now around $163, a return to $80 levels isn't out of the question. And after a mixed Q2 earnings report and mounting macroeconomic pressures - including tariffs under President Donald Trump - a reality check may be in order. See our counter scenario on AMD Stock upside to $330. Indeed, we believe this broad range of upside and downside potential represents a simple fact, that AMD is a pretty volatile stock. Valuation Rests on AI Hope. But Are Things Going To Plan? A key driver of AMD's premium valuation is its potential in the AI chip space. However, Q2 revenues from the company's data center division, which houses its AI accelerator business, fell short of expectations with revenue rising just 14% to $3.2 billion. What's worse - AI chip sales appear to have declined year-over-year, held back by export restrictions to China and a pause as customers await the next-gen Instinct MI350. Compare this with Nvidia, which reported over 70% growth in its data center business to $39 billion last quarter. AMD's AI efforts remain a distant second, and it may be missing out on a significant chunk of the capital pouring into generative AI infrastructure. Should you buy or fear AMD stock? For perspective, Amazon, Meta, Microsoft, and Alphabet together spent roughly $222 billion in capex in 2024, projected to surge to $360 billion in 2025. AMD's inability to capture a larger share of that spend raises concerns about whether its AI narrative can continue to support such a high multiple. There are some positives as well. The Trump administration recently eased restrictions on AMD's MI308 chip shipments to China, which could provide a near-term revenue boost. However, Nvidia's entrenched position - bolstered by its proprietary CUDA software ecosystem - makes customer switching harder and limits AMD's upside. AI Spending Sustainability, Competition There are also broader risks to the AI story. Despite massive infrastructure spending, most companies have yet to figure out compelling monetization models for AI. Shareholder pressure could eventually mount to improve returns, and this could cause tech giants may slow their GPU spending. Meanwhile, many of the big tech companies are building their own custom AI chips. Google has its TPUs, Microsoft is rolling out Maia, Amazon has Trainium and Inferentia, and Meta is building in-house silicon optimized for its own AI workloads. These in-house efforts could reduce dependency on AMD (and Nvidia), and could meaningfully reduce their addressable market. Even if the GPU story stumbles, could AMD fall back on CPUs? Not without challenges. AMD's bread-and-butter PC and server CPU businesses could face pressure as the U.S. economy softens. Inflation remains elevated, job growth is moderating, and President Trump's new tariffs on key trading partners risk driving up costs, dampening consumer spending and business investment alike. That could impact PC sales and in turn hit CPU revenues. How resilient is AMD stock during a downturn? AMD stock has fared worse than the benchmark S&P 500 index during some of the recent downturns. Worried about the impact of a market crash on AMD stock? Our dashboard AMD Dropped 6.4% In A Day. Have You Fully Evaluated The Risk? has a detailed analysis of how the stock performed during and after previous market crashes. Inflation Shock (2022) • AMD stock fell 65.4% from a high of $161.91 on 29 November 2021 to $55.94 on 14 October 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500 • The stock fully recovered to its pre-Crisis peak by 18 January 2024 • Since then, the stock has increased to a high of $211.38 on 7 March 2024 and currently trades at around $163. Covid Pandemic (2020) • AMD stock fell 34.3% from a high of $58.90 on 19 February 2020 to $38.71 on 16 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500 • The stock fully recovered to its pre-Crisis peak by 22 July 2020 Global Financial Crisis (2008) • AMD stock fell 91.2% from a high of $20.35 on 1 January 2007 to $1.80 on 25 November 2008, vs. a peak-to-trough decline of 56.8% for the S&P 500 • The stock fully recovered to its pre-Crisis peak by 21 August 2018 Premium Valuation In summary, it also doesn't help that AMD stock is still expensive; it trades at almost 49x trailing earnings and 42x forward earnings. Sure, Advanced Micro Devices' Revenues have grown considerably over recent years, rising at an average rate of about 15% over the last 3 years (vs. 5% for S&P 500). However, this growth could fade quickly if the economy takes a turn for the worse and if the company fails to meaningfully capture share of the AI chip market. At current multiples, even modest disappointments could trigger an outsized correction in the stock. The rich valuation of AMD stock limits its upside potential in the near-to-mid term. As an alternative, the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid- and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.
Time of India
4 days ago
- Business
- Time of India
AMD stock slips after Q2 profit miss, but AI-driven $8.7 billion Q3 forecast sparks investor hope
AMD dropped its second-quarter report, and while the numbers didn't scream 'perfect,' there was still enough to keep investors interested. The chipmaker, known for taking the fight to rivals like Intel and Nvidia, missed Wall Street's earnings estimate by a whisker. But revenue came in strong, showing that demand across key segments hasn't cooled off. The highlight? AMD's forecast for the upcoming quarter. With demand for AI chips growing rapidly, the company expects a sharp boost in sales. It's also rolling out new AI hardware that could shake up the competition. But at the same time, trade restrictions and export delays still hover over its roadmap, especially in China. AMD revenue beats estimates despite earnings slip For Q2 2025, AMD posted adjusted earnings of 48 cents per share, just under the expected 49 cents. Revenue, though, stood tall at $7.7 billion, beating the $7.4 billion forecast. Year-over-year, that's a 32% rise, driven by solid growth in personal computing and gaming. 🚨 $AMD Q2 Earnings 🚨• Sales $7.7B vs Est. $7.4B• EPS $0.48 vs. Est. $0.48• Data Center Sales $3.2B -- up 14% YoY• Gross Margin 43% vs. Est. 54%Q3 Outlook• Sales $8.7B vs Est. $8.3BAMD says U.S. export controls led to $800M in inventory charges -- gross margin… The company's net income reached $872 million, up from $265 million in the same quarter last year. However, profit was impacted by the lingering effect of U.S. export restrictions, especially around its MI308 AI chips. AMD AI forecast shines a light on Q3 AMD expects to bring in around $8.7 billion in revenue for Q3, give or take $300 million. That's more than what analysts predicted, and it suggests confidence in its next-gen AI chips. CEO Lisa Su pointed to the rollout of the Instinct MI350 series, which AMD claims can rival Nvidia's Blackwell chips in both training and inference. 'Seven of the top ten AI companies are now using Instinct,' Su told analysts during the earnings call. That's a big step up for AMD, especially as firms like Meta and OpenAI look for alternatives to Nvidia's more expensive chips. China export ban: A costly delay for AMD One of the biggest challenges AMD faced this year was the temporary U.S. ban on exporting its MI308 AI chips to China. That move cost the company roughly $800 million in lost revenue and led to an operating loss of $155 million last quarter. Although the Trump administration has now relaxed those restrictions, AMD is still waiting for final clearance to resume shipments. AMD has now delivered two consecutive quarters of declining Data Center stock is down 4.7% after hours.$AMD For now, AMD's Q3 forecast does not include revenue from China-bound AI chips. But once sales restart, it could help AMD recover a big chunk of what it lost earlier this year. Gaming and client segments push ahead While AI grabs headlines, AMD's traditional businesses are also pulling their weight. The gaming segment brought in $1.1 billion in revenue, a 73% increase year-over-year, driven by demand for custom console chips and GPUs. The client's business, which includes desktop and laptop CPUs, pulled in $2.5 billion, up 57% from last year. The data centre segment delivered $3.2 billion, a 14% rise, though just shy of analyst forecasts. AMD's Ryzen Zen 5 processors helped boost momentum in the PC space, where the company continues to eat into Intel's market share. AMD is rivalling Nvidia in the AI segment Despite the upbeat forecast, AMD still trails Nvidia by a large margin in the AI chip race. Nvidia remains the go-to for training large models, thanks to its dominant GPUs and widespread developer support. But AMD is slowly building its case, especially in inference, where price and efficiency matter more. $AMD -- THE INFERENCE ENGINE OF AI -- REPORTS 32% YoY GROWTH 🤯 The MI350 series is AMD's answer to Nvidia's GB200 platform. Su says the new chips offer four times the performance and 35 times better inferencing compared to their previous models. If real-world adoption follows, AMD could start closing the gap sooner than expected.
Miami Herald
31-07-2025
- Business
- Miami Herald
Analysts reset AMD stock price target ahead of key earnings
Advanced Micro Devices (AMD) stock is on the rise as the chipmaker gains momentum in the AI race, following months of lagging behind Nvidia (NVDA) . It was reported earlier this week that AMD is thinking of raising the price of its Instinct MI350 AI accelerator to $25,000 from $15,000, according to Wccftech's report citing HSBC's analyst note. The nearly 70% increase in MI350's price could mean a notable growth in AMD's future revenue. The price increase indicates that AMD is seeing demand for its AI products, the report said. AMD's stock had tumbled in 2024 and earlier this year on concerns about trading uncertainties and its competitive footing. Now, with news on the company's advanced chips, Wall Street is starting to reconsider AMD's long-term potential in the booming AI space. In June, AMD's CEO Lisa Su said at a developer conference that the MI350 series is faster than Nvidia's. Meanwhile, the MI350 is cheaper than its counterpart product from Nvidia's Blackwell B200, Wccftech reported. Su previously predicted $500 billion in AI accelerators market revenue by 2028, but she now sees it topping that number. "People used to think that $500 billion was very large number," she said. "Now it seems well within grasp." Shares of AMD are up more than 14% over the past five trading days. Image source: Cheng/AFP via Getty Images Three months ago, AMD reported stronger-than-expected first-quarter results and gave a solid forecast for the second quarter, even as it faced challenges from the broader economy and export restrictions on AI chip sales to China. The company then posted adjusted earnings of 96 cents per share on $7.44 billion in revenue, both beating Wall Street's expectations. Its data center business generated $3.7 billion in sales, a 57% increase from a year earlier and also ahead of analyst estimates. Related: Jim Cramer drops blunt 6-word message on Nvidia stock "While we face some headwinds from the dynamic macro and regulatory believe they are more than offset by the powerful tailwinds from our leadership product portfolio," Su said in May. AMD is set to report its second-quarter earnings on August 5. Wall Street expects earnings of 47 cents per share on revenue of $7.41 billion. Several analysts are more optimistic and believe the company may deliver stronger results than expected. Bank of America has raised its price target on AMD to $200 from $175, maintaining a Buy rating ahead of the earnings report. The firm said it expects AMD to beat expectations in both Q2 and Q3, driven by strong demand for its AI GPUs and CPUs, according to a research note published on July 29. BofA sees upside supported by solid demand for CPU and GPU, stronger pricing for AI chips, and a robust cloud capex environment, analyst Vivek Arya wrote. Related: Analysts turn heads with new Alphabet stock price target after earnings The firm said AMD is well-positioned to gain market share in both the PC and server CPU markets over the next two years. The firm also expects AMD to maintain a growing presence in the AI accelerator space, benefiting from its current product momentum and competitive pricing compared to Nvidia. "Longer-term, we expect AMD to reach more than 30% of overall CPU market by CY26, up from just below 20% in CY23, as well as potentially 4-5% of AI GPU market," Arya noted. There may also be additional upside if AMD receives regulatory approval to resume AI chip shipments to China, according to the report. While not yet confirmed, BofA sees that potential as a key factor for AMD's GPU sales outlook. UBS also recently raised its price target to $210 from $150 and maintained a buy rating, citing strength in both the PC and server segments, reported on July 29. More Tech Stocks: Analyst who correctly predicted Rocket Lab stock surge resets forecastVerizon Q2 earnings report surprises with remarks on tax reformFund manager who forecast Nvidia stock rally reboots outlook The firm said it expects upside in AMD's second-quarter results, with guidance likely to beat Wall Street expectations. AMD stock has climbed more than 46% year-to-date. Nvidia is up 30% over the same period. Related: Legendary fund manager has blunt message on 'Big Beautiful Bill' The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Business Insider
29-07-2025
- Business
- Business Insider
AMD Stock Surges on Huge Instinct MI350 AI Price Increase Report
Advanced Micro Devices (AMD) stock rallied on Monday alongside reports of a price increase for its Instinct MI350 AI chips. These are special graphics processing units (GPUs) made by AMD for use in artificial intelligence (AI) applications. The latest reports claim AMD will raise the price of these GPUs to $25,000 per unit. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. To put that in perspective, the price for an Instinct MI350 AI GPU prior to this was $15,000. That means AMD will boost the price by $10,000, or roughly 70%. Even so, it's still much cheaper than rival Nvidia's (NVDA) Blackwell B200 AI chip, which starts at $30,000. According to the latest reports, AMD will increase the price of its Instinct MI350 AI chips to match their performance value. The company believes it has reached a point where the Instinct MI350 AI chips are comparable to Nvidia's Blackwell B200 AI chips. Even so, it will keep the price below Nvidia's offerings to attract buyers, a strategy it also employs in sales of its consumer-grade GPUs. AMD Stock Movement Today AMD stock was up 4.34% on Monday, extending a 43.63% year-to-date rally and its 19.12% gain over the past 12 months. Investors will also note that AMD stock received a price target increase from UBS analysts. The firm raised its price target for the shares to $210 from $150 and maintained a Buy rating. The UBS analyst argued AMD is set for strong Q2 performance due to its PC and server operations. AMD will report earnings after markets close on Aug. 5. Is AMD Stock a Buy, Sell, or Hold? Turning to Wall Street, the analysts' consensus rating for AMD is Moderate Buy, based on 26 Buy and 10 Hold ratings over the past three months. With that comes an average AMD stock price target of $145.90, representing a potential 16.08% downside for the shares.
Business Insider
21-07-2025
- Business
- Business Insider
‘Only the Beginning,' Says Investor About AMD Stock
Advanced Micro Devices (NASDAQ:AMD) stock offered little cause for celebration in the latter half of 2024 and into 2025. Despite generating strong revenue amid the ongoing AI boom, the chipmaker's share price tumbled, leaving investors out in the cold. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week. That narrative, however, has shifted sharply in recent months. AMD's share price has skyrocketed 83% over the past three months, driven by renewed market optimism, a standout Q1 2025 earnings report, continued AI infrastructure investments by hyperscalers, and a landmark contract in Saudi Arabia. In fact, one investor, known by the pseudonym Cash Flow Venue (CFV), believes that AMD's 'rally has just begun,' citing product traction and international tailwinds as signs of more upside ahead. As supporting evidence, the investor points to the growing adoption of AMD's MI series GPUs by major tech players. With the Instinct MI350 already shipping and the MI400 expected to debut in 2026, AMD's data center strategy appears to be gaining real momentum. 'AMD doesn't slow down its pace, and while it still lags behind Nvidia, it doesn't have to overthrow it to secure a strong #2 position in the market, still securing high demand, growing and profitable sales, as well as customer relationships ensuring future growth prospects,' the investor added. CFV is also buoyed by some recent regulatory developments, as the Trump administration has indicated its willingness to allow the export of advanced AI chips to China. This could reopen the door for AMD's advanced AI chips, specifically the MI308, to be exported to China. Keep on Buying AMD Stock Taken together, these developments give the investor confidence that AMD's rally still has legs, even with the stock trading at a heightened EV-to-EBITDA multiple of 36.8x. 'Given robust financials, product innovation, and renewed China access, I am raising my AMD rating to Strong Buy for continued upside potential,' exclaims CFV. (To watch Cash Flow Venue's track record, click here) Wall Street, meanwhile, shows a mixed stance. AMD holds a Moderate Buy consensus rating based on 25 Buys and 10 Holds. However, the average 12-month price target of $144.45 suggests the stock may be overvalued by ~8% at current levels. (See AMD stock forecast) To find good ideas for AI stocks trading at attractive valuations, visit TipRanks' Best Stocks to Buy, a tool that unites all of TipRanks' equity insights.
