The article discusses the severe decline of AMD stock, comparing its performance to other large-cap US stocks like the S&P 500. The decreaseTexts 30% is unrealistic due to increasing risks, and the stock may eventually revert to more reasonable valuations. The analysis focuses on three aspects: investor expectations, margins, and macroeconomic conditions, highlighting the challenges the stock faces.
Investors are predicting a shift in tech industry growth, with AMD leveraging growth opportunities like high margins. The stock’s PE multiples differ significantly from Google, spanning from 85 to 19. These divergences are attributed to low net margins, which AMD is unable to justify. Despite smaller earnings releases, the stock’s guidance draws scrutiny, suggesting expectations underwent a significant shift.
The semiconductor industry often experiences cycles of high-valuation stocks anddirname jumps. AMD has Daten an underperforming fourth quarter, driven by Chinese export restrictions and PHI. Compounding this, the stock’s PE multiples and valuation environment worsen during such times. Even small changes in earnings guidance can cause market instability, suggesting the industry is not immune to בשם fluctuations.
With AMD’s track record of consistently delivering superior performance relative to its peers, investing in S&P 500 stocks is beneficial. A “high-quality portfolio” composed of sovereign-independent stocks like Trefis has shown outsizing wins over the S&P 500 over four years. Investors should not be discouraged by AMD’s story, as it provides attractive returns but offers less stability.
