A Look at AMD's Valuation Following Major AI Supercluster and Cloud Partnership Announcements

If you are trying to figure out what comes next for Advanced Micro Devices (AMD), you are not alone. The company just landed a series of headline-making collaborations, including the deployment of its Instinct GPU reference architecture in a major U.S. federal AI supercluster through VDURA. These deals showcase AMD’s rapid progress in powering high-performance computing and AI workloads across both enterprise and government sectors, putting it firmly in the mix with other leading names in the chip industry.

All of this buzz comes on the heels of a year with dramatic ups and downs for AMD stock. Shares are up 33% since January but have slipped about 4% over the past month, suggesting momentum may be pausing as some investors digest recent gains. The pace of collaboration announcements—such as cloud partnerships, AI rollouts, and more—points to real traction for AMD, even in a fiercely competitive environment that includes AI heavyweights and surging demand for scalable compute power.

After such a strong year-to-date run and this string of fresh wins, does AMD offer real value at current levels, or is the market already pricing in the future growth story?

Most Popular Narrative: 10.7% Undervalued

The most widely followed narrative suggests that AMD stock is undervalued by 10.7%. This view is supported by anticipated robust revenue growth and significant margin expansion through 2029, based on AMD's recent momentum and product roadmap.

"Given my updated assumptions, I’m forecasting $52 Billion in revenue for AMD, which represents 16.5% revenue growth per annum to 2029. I will also reduce my discount rate used from 9.7% down to 8.09%."

What is driving this potential and supporting that valuation increase? It goes far beyond headline partnerships and prominent chips. There is one financial forecast behind this fair value that most investors will miss unless they look closer. Want to discover which segment’s growth assumptions create both optimism and skepticism? Follow the full narrative’s trail to see all the projections and understand how this 10% advantage is built.

Result: Fair Value of $194 (UNDERVALUED)

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

However, supply chain disruptions or a resurgence of fierce competition from Nvidia could quickly upend the optimistic growth trajectory projected for AMD.

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

Another View: The Multiples Perspective

While fair value estimates based on future growth sound compelling, another lens suggests caution. Compared to industry levels, AMD's current price looks expensive using this popular market yardstick. Could expectations already be running too hot?

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

Stay updated when valuation signals shift by adding Advanced Micro Devices to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Advanced Micro Devices Narrative

If you see things differently or want to dig deeper into AMD's potential, you have the tools to craft your own outlook in just minutes: Do it your way.

A good starting point is our analysis highlighting 2 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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