2024-04-28 01:41:33 ET
Summary
- AMD stock has seen significant gains in the recent past, but fundamentals have failed to keep pace.
- In fact, AMD's operating income has been declining steadily over the past 3 years, while analyst estimates for future revenue and EBIT have plummeted.
- I argue that market participants have made a major mistake pumping up the stock; and, investors will now likely experience the correction of this mistake.
- On a technical level, AMD stock has already started to breakaggressively, dropping close to 30% from all-time-highs made in early Marchthis year.
- Looking at AMD's upcoming earnings release for the second quarter of 2024, I expect the sell-off to continue. My target price stands at $101.
Advanced Micro Devices ( AMD ) stock has been a big winner over the past few years: Bolstered by the sentiment tailwind associated with GenAI, the shares have returned approximately 63%, compared to a gain of less than 20% for the S&P 500 ( SP500 ), a 3x out-performance. However, investors should note that this bull run has exclusively been driven by multiple expansion. Today, AMD shares are trading at a rich 9x EV/Sales ( FWD ) and 45x EV/EBITDA, suggesting overvaluation relative to the sector by approximately 240% and 230%, respectively....
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Advanced Micro Devices: Expect Sell-Off To Accelerate On Weak Earnings