AMD's valuation is stretched at 7.19X P/S, underperforming sector, but strong growth forecasted.

From Nasdaq: 2024-12-06 11:04:00

Advanced Micro Devices (AMD) shares are trading at a stretched valuation with a Value Score of D. The 12-month Price/Sales ratio is 7.19X, a premium compared to the sector. YTD, AMD shares have lost 4.1%, underperforming the sector. Weakness in the Embedded segment and competition from NVIDIA have impacted performance.

AMD expects strong growth in Data Center and Client segment revenues, but a decline in Embedded and Gaming segments. Earnings estimates for Q4 2024 show approximately 22% year-over-year growth. The Zacks Consensus Estimate for Q4 2024 earnings is $1.07 per share, with 38.96% growth year-over-year.

AMD has been benefiting from strong data center chip sales, with record revenues in Q3 2024. Global semiconductor sales reached $56.9 billion in October 2024, indicating 22.1% year-over-year growth. Gartner forecasts 19% growth in semiconductor revenues in 2024, benefiting AMD’s prospects.

AMD’s strategic acquisitions and partner base support its growth. Recent acquisitions like Silo AI and ZT Systems enhance data center AI capabilities. New product offerings drive growth in data center and consumer markets. AMD has strengthened its HPC portfolio with the El Capitan supercomputer.

Investors should note AMD’s expanding portfolio and acquisitions, but also consider the weak near-term prospects and competition from NVIDIA. The stock is currently below moving averages and has a Growth Score of D. With a Zacks Rank #3 (Hold), investors may want to wait for a more favorable entry point to accumulate the stock.



Read more at Nasdaq: Is AMD Stock’s 7.19X P/S Still Worth it? Buy, Sell or Hold?