Wondering if Advanced Micro Devices (AMD) is really worth the buzz? You are not alone, and digging into the stock’s valuation could reveal some surprises.
AMD’s share price has soared an impressive 77.6% year-to-date despite some choppiness, including a 4.2% dip over the past week and a 17.5% pullback in the last month.
Much of this recent volatility comes in the wake of industry news about surging demand for AI-focused chips, as well as chip supply chain developments grabbing headlines. These factors have sparked lively debates about whether AMD’s growth story is only just getting started or if the stock is becoming riskier for new investors.
Right now, AMD scores 2 out of 6 on our undervaluation checks, meaning there is more to explore in how investors are thinking about fair value. We will compare several valuation methods next, and stick around because we will show you an even better way to evaluate what the market may be missing.
Advanced Micro Devices scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
A Discounted Cash Flow (DCF) model estimates what a company is worth by taking its expected future cash flows and discounting them back to today’s value. For Advanced Micro Devices (AMD), this involves projecting the company’s future free cash flow (FCF) and determining the present value of that stream of cash.
Currently, AMD generates $5.6 billion in free cash flow. Analysts predict strong growth over the coming years, projecting FCF to rise to $30.9 billion by 2029. The projection extends over the next decade, with Simply Wall St extrapolating AMD’s FCF up to $79.8 billion by 2035. Analyst estimates are more concentrated in the upcoming five years, with the remainder of projections based on continuing trends.
Based on the DCF model, AMD’s intrinsic value is assessed at $397.54 per share. This is about 46.1% higher than its current market price, which may suggest the stock is significantly undervalued according to cash flow projections.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Advanced Micro Devices is undervalued by 46.1%. Track this in your watchlist or portfolio, or discover 926 more undervalued stocks based on cash flows.
AMD Discounted Cash Flow as at Nov 2025
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Advanced Micro Devices.
The Price-to-Earnings (PE) ratio is a widely used valuation metric for profitable companies like Advanced Micro Devices because it measures how much investors are willing to pay for each dollar of company earnings. For established tech businesses, the PE ratio helps capture both current profitability and future growth expectations in a single number.
A higher PE ratio typically reflects optimism about stronger earnings growth, while a lower PE can indicate either lower growth prospects or higher perceived risk. Comparing a company’s PE to its industry average and similar peers can help gauge whether it is trading at a premium or discount. However, this does not account for company-specific factors such as margin strength or risk profile.
Currently, AMD’s PE ratio is 111.4x, substantially above the semiconductor industry average of 35.8x and its peer group average of 65.4x. Simply Wall St’s proprietary “Fair Ratio” provides another perspective by estimating what a reasonable PE should be for AMD, taking into account the company’s earnings growth, industry dynamics, profit margins, market capitalization, and specific risk factors. For AMD, the Fair Ratio is calculated at 63.3x. This tailored measure is considered more precise than straightforward industry or peer comparisons because it reflects key fundamentals and the unique risk profile of AMD today.
Comparing AMD’s actual PE ratio (111.4x) to its Fair Ratio (63.3x) indicates that AMD’s shares are trading richly relative to what would be considered fair value given its profile and prospects.
Result: OVERVALUED
NasdaqGS:AMD PE Ratio as at Nov 2025
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1434 companies where insiders are betting big on explosive growth.
Earlier, we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is a story investors construct about a company’s future, combining not only their estimates for revenue, profit margins, and fair value, but also the “why” behind those numbers. This reflects unique perspectives on industry trends, leadership, and risks beyond what a spreadsheet can capture.
Narratives link a company’s story to its projected financials and ultimately its fair value, transforming cold data into a living outlook you can actually test. On Simply Wall St’s Community page, millions of investors use these Narratives daily. No complex financial modeling is required, making them a smart, user-friendly tool for all levels of experience.
What makes Narratives especially powerful is that they update dynamically as new information comes in, like earnings surprises or shifting AI regulations. This helps you see instantly how the story and fair value change in real time. You can compare your Narrative’s fair value with the share price to decide whether it’s time to buy or sell.
For example, recent Narratives for Advanced Micro Devices range from a bullish view with a fair value of $230 per share, pricing in surging AI adoption and significant margin expansion, to a more cautious take at $136, highlighting export risks and margin challenges. Wherever you fall, Narratives help you anchor your decisions in your own perspective, not just the latest headline.
For Advanced Micro Devices, here are previews of two leading Advanced Micro Devices Narratives:
🐂 Advanced Micro Devices Bull Case
Fair Value: $276.76
Undervalued by: 22.7%
Revenue Growth Forecast: 32.9%
Analyst consensus is that AMD has substantial tailwinds in AI, data centers, and adaptive computing. Recent partnerships and product momentum are boosting future prospects.
Rising analyst price targets reflect optimism. However, potential challenges include regulatory risk, competition from Nvidia, and integrating acquisitions like Xilinx.
Estimated fair value is significantly above today’s share price. Achieving this value requires strong revenue and margin expansion to materialize amid execution and macro risks.
🐻 Advanced Micro Devices Bear Case
Fair Value: $193.68
Overvalued by: 10.6%
Revenue Growth Forecast: 18.8%
AMD’s growth in CPUs, GPUs, and AI chips drives its promise, but it still faces strong competition from Nvidia and Intel, as well as cyclical and macroeconomic risks in the semiconductor sector.
Execution challenges, reliance on external manufacturers like TSMC, and geopolitical issues present meaningful near-term threats to growth and profitability.
The narrative suggests the current market price may reflect over-optimism, especially if AMD cannot capitalize on projected AI and data center opportunities as swiftly or profitably as markets expect.
Do you think there’s more to the story for Advanced Micro Devices? Head over to our Community to see what others are saying!
NasdaqGS:AMD Community Fair Values as at Nov 2025
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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