AMD stock just made a huge move, jumping nearly 9-10% in a single day. After months of underwhelming performance compared to some of its tech peers, many investors are now wondering if this is the beginning of a true comeback for Advanced Micro Devices.
A Long-Awaited Breakout
For the past year or two, AMD has lagged behind Nvidia, which has dominated headlines and capitalized on the booming AI chip market. While Nvidia's stock has soared over 1,400% in the past five years, AMD has returned a respectable — but much smaller — 133% in the same period. This has led some retail investors to sarcastically nickname the stock “Advanced Money Destroyer.”
But this week’s surge may signal that AMD is ready to step out of Nvidia’s shadow.
The Catalyst: A New AI Chip Launch
The surge largely stems from AMD's announcement of its new MI350 AI accelerators, which the company claims are competitive — and potentially even superior — to Nvidia’s current offerings. AMD CEO Lisa Su believes the AI chip market could grow into a $500 billion industry by 2028, and AMD plans to carve out a significant share.
The unveiling of new AI hardware has renewed investor enthusiasm, driving the stock up nearly 10% intraday. Analysts have taken notice as well, with several raising their price targets following the announcement.
Still Some Caution Flags
While the stock’s jump is encouraging, investors are still facing some big questions when evaluating AMD long-term:
- Valuation: AMD's current price-to-earnings (P/E) ratio sits at a lofty 92.65 — much higher than many investors consider reasonable (typically 20-30 for stable companies). High P/E ratios signal high expectations, leaving little room for error if growth slows.
- Recent Performance: Despite the one-day surge, AMD is still down over 20% in the past year. Year-to-date, it's up about 4.7%, barely outperforming the S&P 500’s 1.47% gain.
- Hedge Fund Activity: In Q1 2025, hedge funds were selling more AMD shares than buying, signaling some institutional caution ahead of the recent news.
- Insider Sales: Company insiders have also sold shares recently, though the overall sentiment remains slightly positive over the past three months.
Analyst and Employee Sentiment Remains Strong
Despite the mixed financial signals, analysts remain largely bullish on AMD. Of 55 analysts, about 71% give AMD a “buy” rating, while 29% rate it as “hold” — and notably, 0% recommend selling at this time.
Internally, AMD continues to rank as a strong company culture-wise. Employees give the company 3.9 out of 5 stars, with 82% recommending it as a great place to work. CEO Lisa Su maintains an impressive 93% approval rating among staff.
A $500 Billion AI Opportunity
The major wildcard for AMD is the rapid growth of the AI market. With Nvidia leading the way, AMD’s ability to close the gap with competitive new chips could unlock significant growth opportunities. If AMD captures even a modest portion of the projected $500 billion AI chip market, it could dramatically change its growth trajectory.
Should You Buy AMD?
As always, investors should exercise caution when making decisions based on short-term rallies. While the recent one-day spike is exciting, the long-term sustainability of AMD’s growth will depend heavily on:
- The success of its new AI chips.
- Its ability to take market share from Nvidia.
- Continued strong management and execution.
For now, AMD appears to be positioning itself well for the AI-driven future. But with high valuation and strong competition, this stock remains a higher-risk, higher-reward option for growth investors.
Disclaimer: This article is for informational purposes only and should not be considered financial advice. Always do your own research before making investment decisions.