AMD AMD
What does AMD do?
Advanced Micro Devices is a US semiconductor company that develops processors, graphics processors and AI accelerators. The chips are not manufactured in-house but are produced by external contract manufacturers. The company reports in three segments: Data Center, Client and Gaming, and Embedded.
In the data center, AMD supplies EPYC-series server processors and Instinct accelerators for AI applications to cloud providers and enterprises. The Client and Gaming segment includes Ryzen processors for PCs, Radeon graphics cards and chips for game consoles. Embedded combines adaptive chips, FPGAs and system solutions for industry, communications and automotive. Competitively, AMD faces mainly Intel in processors and Nvidia in AI accelerators and graphics chips. Its position rests on chiplet architectures, a broad product portfolio and growing software offerings, although the AI software ecosystem of the market leader provides a considerable lead.
Score profile
Rank vs. Semiconductors (40 companies). 10 = top of the group, 5 = middle. Calculated from the metrics below, without AI.
Metrics compared with the industry
On profitability and quality, AMD ranks above average in the group Semiconductors (6.3/10). On growth, the company ranks above average in the group Semiconductors (7.4/10). On valuation (higher = cheaper), the stock ranks below average in the group Semiconductors (3.2/10). On financial strength, AMD ranks in the middle in the group Semiconductors (5.0/10).
| Metric | Stock | Group median | Ranking |
|---|---|---|---|
| Forward P/E | 29.1x | 18.7x | better than 25 % |
| Trailing P/E | 110.0x | 42.4x | better than 16 % |
| PEG ratio | 0.4x | 0.8x | better than 80 % |
| EV/EBITDA | 74.3x | 21.3x | better than 11 % |
| Price/sales | 18.6x | 5.8x | better than 14 % |
| Price/book | 12.4x | 5.1x | better than 19 % |
| Revenue growth | 44.7% | 25.5% | better than 76 % |
| Earnings growth | 93.8% | 7.4% | better than 72 % |
| Gross margin | 56.0% | 53.3% | better than 59 % |
| Operating margin | 21.2% | 15.5% | better than 66 % |
| Net margin | 16.8% | 10.3% | better than 66 % |
| Return on equity | 12.0% | 8.6% | better than 59 % |
| Debt/equity | 13.5% | 36.5% | better than 71 % |
| Current ratio | 2.7x | 3.3x | better than 44 % |
| Free cash flow yield | 0.9% | 1.3% | better than 35 % |
| Dividend yield | 0.0% | 1.2% | – |
| Payout ratio | 0.0% | 38.0% | – |
| Beta | 2.54 | 1.92 | – |
Valuation: what is AMD worth?
Two valuation approaches – a discounted cash flow model and a valuation at the industry’s median multiples – give AMD a model range of 331.09 USD to 331.09 USD per share.
48 analysts, average rating “Strong buy”, average price target 657.49 USD (+27.7%).
The full DCF matrix, the reverse DCF (what growth the price implies) and scenarios are part of the Pro analysis.
What the business depends on
- Demand from cloud providers and enterprises for server processors and AI accelerators largely determines growth in the data center.
- The sales cycle for PCs, graphics cards and game consoles influences revenue and capacity utilization in the Client and Gaming segment.
- A leading technological position in architecture and manufacturing processes affects market share and product mix.
Risks
- Dependence on a few external contract manufacturers makes AMD vulnerable to supply bottlenecks and geopolitical tensions in the region.
- Strong competition from Nvidia and Intel can put pressure on prices, market share and margins.
- Export restrictions and the cyclicality of the semiconductor industry can significantly affect sales and predictability.
What to look for with AMD
Gross margin is particularly informative because it shows whether AMD retains pricing power with high-margin data center products relative to the cyclical PC and console business.