Advanced Micro Devices (NASDAQ:AMD) shares have enjoyed a summer to remember, with the company finally turning the corner and beginning to truly benefit from the AI bonanza. One look at the chart tells the story – AMD’s share price has more than doubled over the past half year, a welcome change after multiple quarters of slipping value.
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While AMD remains well behind Nvidia in scale, the company is intent on gaining ground in the data-center market, where Nvidia still holds a commanding lead. At AMD’s Investor Day last week, CEO Dr. Lisa Su outlined what she described as a “very clear” route for the company to secure a double-digit share of data-center spending. AMD is targeting $35 billion in revenue for 2025 and is looking to expand at a CAGR of 35% over the coming few years.
This backdrop is exactly what one top investor, known by the pseudonym JR Research, leaned into when he spotted the opportunity in late March. JR deemed AMD ‘dirt cheap’ when the stock was trading at $100, but with shares now hovering near $250, he is re-evaluating that stance and believes a more cautious approach is warranted at this stage.
“With AMD’s share surge also looking extended, I urge investors to remain patient and allow the market to digest the optimism first before joining the fray,” explains JR, who is among the top 2% of stock pros covered by TipRanks.
The investor notes that AMD now expects its total addressable market (TAM) to expand from $500 billion in 2028 to $1 trillion by 2030, a substantial increase that broadens the company’s long-term opportunity.
That being said, JR points out that execution risks are very much a part of the equation, with CoreWeave’s recent supply chain hiccup a stark reminder of the stakes at play. The growing value of AMD’s ventures will also make it difficult to stay in front of the market’s greedy hopes and dreams as well.
“While I’m not betting against Lisa Su, big numbers will drive big expectations that could make clear beats-and-raises harder to achieve,” adds JR.
And those expectations are already visible in the stock’s valuation. AMD now trades at a forward EBITDA multiple north of 43x – well above Nvidia’s 26x – a gap JR believes reflects how much optimism is already priced into the shares.
“If I’m you, I will definitely be more careful,” JR Research sums up, assigning AMD shares a Hold (i.e., Neutral) rating. (To watch JR Research’s track record, click here)
Wall Street is a bit more upbeat. With 27 Buys and 10 Holds, AMD carries a Moderate Buy consensus rating, and its 12-month average price target of $281.78 suggests about 14% upside from current levels. (See AMD stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
