Investors in Austin, Texas have witnessed the recurrent cycles of Advanced Micro Devices, Inc. stock’s trajectory since 2017. These cycles typically follow a predictable pattern, with initial skepticism giving way to periods of rapid growth, followed by a correction to more sustainable levels. For instance, a previous analysis on AMD claimed the stock was in the first stage of accumulation, forecasting overdue growth in the stock price, which has since surged 70%.
AMD’s recent surge comes after the company’s Q4 results, which revealed a 10% year-over-year revenue growth driven by the Data Center and Client segments. The focus on AMD’s Data Center initiatives, especially its AI portfolio, has yielded strong performance and signals significant potential market share gains. The company also forecasts over $3.5 billion in revenue from the Data Center GPU segment in 2024, indicating substantial growth potential.
However, caution is advised as the stock’s valuation may have outpaced its underlying fundamentals. An updated discounted cash flow (DCF) model for AMD suggests a fair price range of $149-154. Despite positive progress, investors are urged to carefully consider the risk and reward balance when evaluating AMD stock, particularly given the recent surge to $170. This analysis does not mean that the stock will necessarily drop to its fair valuation in the short term, but it’s important to be mindful of the excitement in the market about AI and how it could impact stock prices.