Is AMD Stock Overvalued? Tech Analyst’s Take Ahead of Upcoming Earnings Report

Lynx Equity Strategies recently shared a cautious viewpoint on AMD (NASDAQ:AMD) ahead of its earnings report. They noted that the stock’s impressive ~80% rise over the past three months seems to overshadow the company’s actual performance.

Analyst KC Rajkumar pointed out that the surge in AMD’s stock may be based on some strong assumptions. A lot of hope rides on their MI350/MI355 and upcoming MI400X GPUs being widely adopted by major companies like Meta and potentially Amazon Web Services (AWS). However, Rajkumar expressed skepticism about whether AMD has truly gained traction with AWS. He emphasized that without support from AWS, AMD could heavily rely on Meta for its growth.

While some experts predict revenue growth of over 30% for AMD by 2025, Lynx cautioned that the market hasn’t yet seen solid evidence of these GPUs being adopted in large data centers this year. They also raised questions about AMD’s recent resumption of shipments of its MI308 chip to China, as there are concerns that the Chinese government might impose similar restrictions on AMD as it did with Nvidia.

Lynx’s analysis suggests there may be risk involved. They estimate that if AMD maintains a price-to-earnings multiple of 25 times future earnings, the stock might drop to around $150. Rajkumar concluded that the stock may have already factored in years of strong growth that might not materialize as expected.

To consider broader trends, a survey from TechRepublic finds that 74% of IT professionals believe that vendor partnerships like those AMD is pursuing are crucial for growth in the tech sector. This highlights the importance of solid relationships in driving business success today.

Overall, the conversation around AMD reflects a mix of cautious optimism and clear risks. With its stock having soared, analysts and investors alike are keeping a close watch to see if the company can deliver on its ambitious promises.

For more insights, you can check out a deeper analysis on Investing.com.

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Lynx Equity Strategies, stock, KC Rajkumar, cautious note, earnings release