AMD stock did something not done since 2023


The stock market has begun this year. In the first few weeks of 2025, technology stocks in particular showcased similar levels of momentum seen for many of the last two years – thanks to a large extent to the continued support of the Artificial Intelligence (AI) narrative.

However, the euphoria stopped screaming in late January after a new Chinese business called Deepseek released a model AI similar to Chatgpt Openai.

What surprised investors is that Deepseeek claims to have built his AI for much less than that of Openai, anthropic, confusion, and other new and other businesses in the US spend. Unsurprisingly, technology stocks have been falling steeply over the past few weeks. In particular, chip stocks have actually been rocked.

Since the news of Deepseeek began to get up at the end of January, shares of Advanced Micro Devices (NASDAQ: AMD) Falling approximately 10%. Below, I'm going to analyze some interesting trends in AMD pricing and explore whether it's now a good time to buy shares from the chip leader.

The pricing metric that is useful to me is On plural (P/E). This ratio considers what Wall Street analysts anticipate for future company earnings, which can help give an insight into how industry experts are looking at company growth prospects in relation to its peers.

In the table below, I have summarized P/E P/E and AMD market capitalization as a quarter end for the past year.

Category

9/30/2023

12/31/2023

3/31/2024

6/30/2024

9/30/2024

Current

Forward p/e.

24.6

39.4

53.8

47.4

30.1

25.6

Market capitalization

$ 166 billion

$ 238 billion

$ 292 billion

$ 262 billion

$ 265 billion

$ 194 billion

Data Source: Yahoo! Finance

P/E AMD frontman of 25.6 is essentially in line with levels seen back in September 2023. The key difference I see is that the company's market capitalization has grown approximately $ 30 billion in this period of 15 month.

Price and value leaning against each other on a scale
Image source: Getty images.

The slide below breaks down revenue and AMD operating income for 2024. In my eyes, the most important details on this slide are the operation of the company's data center as this segment competes closest with Nvid.

AMD segment revenue for 2024
Image source: Investor links.

Last year, AMD data center business grew 94% to $ 12.6 billion. More importantly, the company produces significant operating leverage in this business as seen in the expanding profit margins. Unfortunately, a sluggish growth of AMD gaming and rooting units drag on the company's overall revenue and profit levels – and that's what I think investors are harming on it.



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