A Look at AMD's Valuation Following Breakthrough AI Milestone and High-Profile Partnerships

Advanced Micro Devices (AMD) has drawn attention after Zyphra revealed ZAYA1, a large-scale Mixture-of-Experts AI model trained entirely on AMD’s GPU and networking platform. This milestone comes as the company enters new joint ventures and reports major customer wins.

See our latest analysis for Advanced Micro Devices.

Buoyed by headline-making partnerships and major customer wins, AMD’s share price has climbed sharply, up 82% so far this year, while a 1-year total shareholder return of nearly 55% signals robust market belief in its ongoing AI-driven expansion. As these catalysts unfold, momentum for the stock appears to be building, with investors taking note of AMD’s ability to turn strategic alliances and technology breakthroughs into tangible growth.

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With shares near all-time highs and Wall Street analysts projecting further gains, the question now is whether AMD’s rapid ascent still leaves room for upside or if the market has already priced in its anticipated AI-fueled growth.

Most Popular Narrative: 18.6% Undervalued

With Advanced Micro Devices closing at $219.76 and the most closely followed narrative setting fair value at $270, market consensus points to significant upside from current levels. According to oscargarcia, important evidence for this valuation comes straight from the company's transformation strategy and future growth blueprint.

AI & Data Centre focus: AMD emphasised that its growth strategy is largely anchored in accelerating AI workloads and data-centre infrastructure. In addition to silicon, AMD highlighted the importance of its software stack and open ecosystems (for AI, HPC, adaptive compute).

Read the complete narrative.

Curious how this bullish estimate comes together? The secret lies in expectations of profit acceleration and a shift toward AI infrastructure. See which assumptions could make or break this fair value and why the path to triple profits may surprise you.

Result: Fair Value of $270 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, unexpected delays in product launches or a sudden shift in AI spending trends could quickly disrupt AMD's current trajectory and growth expectations.

Find out about the key risks to this Advanced Micro Devices narrative.

Another View: Is AMD’s Price Getting Too Rich?

Looking at another yardstick, AMD’s price-to-earnings ratio sits at 114x, which is far steeper than the industry average of 36x and also well above the peer average of 67x. Compared to the fair ratio of 65x, which is the level the broader market could reset towards, this raises real questions about premium risk for buyers at current levels. Could this multiple unwind if sentiment shifts, or is continued growth enough to justify it?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Advanced Micro Devices Narrative

If you prefer your own approach or want to challenge these conclusions, you can craft your own analysis of AMD’s prospects using the data provided in just a few minutes. Do it your way

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Advanced Micro Devices.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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