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If you are trying to decide what to do with Advanced Micro Devices stock, you are definitely not alone right now. The past few months have been a wild ride for AMD, giving investors plenty to cheer about. After a steady upward climb, the stock closed at $252.92, with a stunning 109.7% gain year-to-date and an eye-popping 58.6% pop just in the last month. That sort of momentum naturally has everyone wondering: is there more room to run, or is this as good as it gets?

Much of this excitement traces back to the growing market buzz around AI computing, where AMD has been grabbing headlines thanks to both its latest hardware launches and fresh partnerships with big players in cloud infrastructure. Though the AI story is driving a lot of expectations, the market seems to be constantly re-evaluating AMD’s competitive positioning and its ability to keep growing as more players rush in. Notably, the 8.5% gain over the past week hints at renewed confidence in the company’s prospects compared to rivals.

But hype alone does not tell the full story. If you are trying to make a level-headed decision, valuations matter. Looking under the hood, AMD’s current value score sits at 2 out of 6, meaning the stock is flagged as undervalued in just two checks out of the six most common methods. That is neither a screaming deal nor a red flag; instead, it calls for a deeper look at how AMD stacks up across key metrics.

Let’s dig into those valuation approaches and see what each can (and cannot) reveal, because as you will see, there is an even better way to make sense of AMD’s worth that many investors overlook.

Advanced Micro Devices scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

The Discounted Cash Flow (DCF) model estimates a company’s intrinsic value by projecting its future free cash flows and discounting them back to today’s dollars. This approach gives investors a sense of what the business is fundamentally worth based on its ability to generate cash over time.

For Advanced Micro Devices, the DCF model starts with its latest reported Free Cash Flow of $4.1 Billion. Analyst estimates provide projections out to 2029, forecasting that AMD could generate as much as $18.7 Billion in free cash flow by that year. After five years, additional annual projections are extended through 2035, all converted into today’s terms using a required rate of return.

Based on these assumptions and projections, the estimated DCF fair value for AMD is $165.73 per share. With the current share price at $252.92, this model implies the stock is trading at about a 52.6% premium to its intrinsic value. This suggests AMD appears substantially overvalued based on this cash flow methodology, even when factoring in robust long-term growth.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Advanced Micro Devices.

Our Discounted Cash Flow (DCF) analysis suggests Advanced Micro Devices may be overvalued by 52.6%. Find undervalued stocks or create your own screener to find better value opportunities.

For growing and profitable companies like Advanced Micro Devices, the Price-to-Sales (P/S) ratio is often a preferred way to assess valuation. This metric is especially useful when companies are reinvesting heavily for growth, and it helps investors gauge how the market values each dollar of revenue generated.

The “right” P/S ratio for a company depends on several factors, notably its future growth outlook and the risks it faces. Higher expected growth or lower risk typically support a higher multiple, while lower growth or more uncertainty would warrant a lower ratio. Investors also compare this metric to industry averages and direct peers for further context.

Currently, AMD trades at a P/S of 13.87x. This sits slightly below the average of its peers at 14.51x, but well above the broader semiconductor industry average of 5.28x. Simply Wall St’s proprietary Fair Ratio for AMD, calculated using an algorithm that factors in the company’s growth rate, profit margin, size, risk profile and its specific competitive landscape, is 17.95x. Unlike industry or peer averages, the Fair Ratio gives a more tailored sense of what a “normal” valuation should be for AMD specifically, rather than lumping it in with companies that might have very different prospects or risks.

Given that AMD’s actual P/S ratio of 13.87x is noticeably below its Fair Ratio of 17.95x, this suggests there is still value in the stock at current levels, even at a premium to the industry. AMD may be undervalued by this approach, considering its strong outlook and fundamentals.

Result: UNDERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Earlier, we mentioned there is an even better way to understand valuation. Let’s introduce you to Narratives, a dynamic approach that brings your unique perspective to investment decisions by combining a company’s story with your own financial forecasts.

A Narrative is more than just numbers on a page. It is your personal thesis about Advanced Micro Devices, where you express why you think the company will outperform (or underperform) and how your assumptions about future revenue, margins, and fair value shape your outlook.

Instead of relying solely on static data or generic ratios, Narratives link a company’s journey, including key business drivers, risks, and opportunities, to the numbers in a concrete forecast, which then outputs an estimated fair value. This method is simple, accessible, and built into Simply Wall St’s Community page, where millions of investors worldwide compare Narratives and revise them as fresh news or earnings are released.

With Narratives, you get a clear, side-by-side view of when AMD’s price is below, above, or right in line with your own fair value, helping you decide when to buy, hold, or sell. In addition, these projections update automatically as new developments unfold, so you always have the latest story.

For example, some AMD Narratives forecast a fair value as low as $136 per share, focused on margin pressures and export risks, while others see over $230 per share, emphasizing accelerating AI deals and long-term market share gains.

For Advanced Micro Devices, here are previews of two leading Advanced Micro Devices narratives:

🐂 Advanced Micro Devices Bull Case

Fair Value: $290.64

Current Price is approximately 13% below this narrative’s fair value

Forecast Revenue Growth: 31%

• Projects AMD’s explosive revenue and margin growth, driven by aggressive expansion in AI and efficiency improvements led by CEO Lisa Su.

• Expects new product launches in 2026 to accelerate performance, targeting AMD stock in the $200 to $300 range within 2 to 3 years and above $500 over 10 years.

• Highlights AMD’s improving profit ratios and consistent revenue growth, viewing margin and operational gains as the primary value drivers.

🐻 Advanced Micro Devices Bear Case

Fair Value: $180.10

Current Price is approximately 40% above this narrative’s fair value

Forecast Revenue Growth: 16.5%

• Credits AMD’s strong CPU and GPU innovation, but sees limited upside due to heavy competition from Nvidia, supply chain risks, and gaming segment volatility.

• Identifies Data Center and Client segment momentum but forecasts more modest, cyclical growth rates and views Embedded and Gaming as near-term weak spots.

• Values AMD’s market share gains but considers current pricing overextended relative to achievable near-term profit growth.

Do you think there’s more to the story for Advanced Micro Devices? Create your own Narrative to let the Community know!

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.

Companies discussed in this article include AMD.

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