When I look at AMD (Advanced Micro Devices), I see a company that’s always been a fascinating player in the semiconductor industry. They’re best known as a top chipmaker and often mentioned alongside Nvidia when people talk about AI-related stocks. Unlike Nvidia, which has dominated headlines with its massive surge in valuation, AMD tends to play the role of the underdog—but still an important competitor.
Business Model and Competitors
AMD’s core business is in designing and developing high-performance, adaptive computing technology, while outsourcing manufacturing to third-party foundries such as TSMC. Their main rivals remain Nvidia and Intel, and for investors who want exposure beyond Nvidia, AMD is usually one of the first alternatives considered.
Recent Performance and Guidance
The company has been generating positive sentiment from analysts despite not matching Nvidia’s returns. Their forward guidance looks strong, with expectations of:
- Double-digit growth in the data center segment
- Modest growth in client and gaming
- A return to growth for their embedded segment
Over the past year, AMD’s stock price has grown just 5.5%, underperforming the S&P 500. Over the past five years, however, it’s up more than 114%, though the ride has been full of peaks and valleys. Interestingly, in the last three months alone, the stock has surged about 35%, showing potential short-term momentum.
Valuation Concerns
This is where I start to get cautious. AMD’s P/E ratio sits at 92.36, which is extremely high compared to the market average of around 20–30. Add to that the lack of a dividend, and you’re really only buying AMD for growth potential.
Looking deeper:
- EV/EBITDA: 46.15—worse than 75% of semiconductor peers (industry mean is closer to 19.1).
- PEG ratio: 1.9, which suggests fair value when considering growth potential.
So while the P/E and EV/EBITDA ratios suggest overvaluation, the PEG ratio hints that maybe the growth outlook justifies the price—at least somewhat.
Financial Health
AMD’s balance sheet looks solid, with assets far outweighing liabilities. Their price-to-book ratio of 4.38 isn’t terrible for the sector. However, return on assets and capital are negative, which does raise some concerns about efficiency.
Quarterly financials are also a mixed bag. They slightly missed EPS in June 2025 by about 0.5%, but they beat revenue estimates by 3.4%. Overall, revenue and margins look good heading into Q3.
Insider and Hedge Fund Activity
Hedge fund ownership of AMD increased by almost 3 million shares in Q2 2025, with a 65% buy to 35% sell ratio—a shift from selling in Q1. Insider activity has been mixed, with a large buy in August but a heavier lean toward selling in September (68% sell vs. 32% buy).
Analyst Consensus
Wall Street sentiment is strong:
- 68% Buy
- 31% Hold
- 0% Sell (out of 57 analysts)
They’ve also consistently beaten earnings projections, and analysts raised earnings expectations for Q3 after Q2’s results.
Company Culture and Leadership
One factor I think gets overlooked is employee sentiment. On Glassdoor, AMD scores 4 out of 5 stars, has been ranked among the Top 100 Best Places to Work four years in a row, and even cracked the Top 10 in 2024.
Even more impressive—94% of employees approve of the CEO, one of the highest ratings I’ve ever seen. This tells me AMD has strong leadership and a positive internal culture, which can often drive long-term success.
My Verdict on AMD
When I put all this together, I see AMD as a hold right now. Here’s why:
- The good: Strong position in a growing AI-driven semiconductor industry, positive analyst sentiment, solid balance sheet, and excellent employee satisfaction.
- The concerns: Very high P/E and EV/EBITDA ratios, no dividend, and questions about whether the current price is justified.
Personally, I already own a little bit of AMD. It’s actually my only stock that’s negative in my portfolio at the moment, but I’m holding because I believe in their long-term potential. They may never surpass Nvidia as the industry leader, but I think AMD will continue to carve out a significant market share in a sector that’s only going to grow.
For new investors considering AMD, I’d be patient. If you’re investing for the next 5–10 years like I prefer to, AMD could be a fine addition. But in the short term, I think waiting for a better entry point might make more sense.
And of course, this is just my opinion—not financial advice.