AMD Stocks: Analysts Predict 125% Upside Despite Struggles

AMD Stocks are currently experiencing a decline of around 50% from their peak, with analysts like Hans Mosesmann projecting a potential upside of 125%. However, AMD faces significant challenges from competitors like Nvidia, complicating investment decisions.

Date: 21-03-2025

AI Rating: 5

Earnings Performance and Revenue Growth
In Q4, AMD's overall revenue grew by 24%, and profits rose by 42%. These figures indicate healthy earnings growth, but the company continues to face challenges, especially against competitors like Nvidia, whose data center revenue is significantly higher.

AMD's gaming revenue was down 59% year over year, alongside a 13% decrease in embedded process revenue. Client revenue, however, saw a positive increase of 58%, standing at $2.3 billion. It’s crucial to note that while some areas are performing well, the gaming segment, a significant revenue contributor, is struggling due to a lack of market growth.

Despite these varied performances, AMD’s profitability metrics suggest potential positive news for investors. The expected revenue growth rates are 23.4% and 20.7% for 2025 and 2026, respectively. These anticipated growth rates could be appealing, giving AMD a slight premium over the S&P 500.

Competitor Analysis
AMD's performance is being overshadowed by its competitor Nvidia, which reported a revenue increase of 93% in its data center division compared to AMD's 69%. The fact that AMD is not meeting or exceeding the growth rates of its primary rival presents significant risks for its stock performance.

Valuation Considerations
At a forward price-to-earnings (P/E) ratio of 21.5, AMD trades at a slight premium compared to the S&P 500, valued at 20.5 times forward earnings. Given the anticipated revenue growth and the potential for investors to achieve market-beating returns if the stock is held for three to five years, there is a case for AMD being fairly priced at current levels.

Overall, AMD does display attributes of a value play, although the competitive landscape remains a significant concern. Investors must weigh the potential for upside against ongoing competitive pressures, particularly from Nvidia.

Stocks: AMD NVS INTC