AMD Valuation and Earnings Growth Catalysts

about 15 hours ago

"Next, I want to take a closer look at AMD's forward PE ratio, and it's currently at 50, where the median is roughly 32.78. Now, this seems pretty high and some investors might say, "Jose, this is looking a lot like January 2024 when we saw the stock and we can actually even look at the past five years." January is when the stock started going up like crazy and you kind of peaked and then you saw this massive downturn, right? So, some investors were saying, "Look, it's starting to look like this again where you're just having crazy valuations and then what's going to happen is you're going to have a massive, massive pullback." But I think there is a big difference right now. Right now AMD stock has seen a massive run up because of two things. First is obviously the OpenAI deal. The second, in my opinion, is that massive order from Oracle. I would say it's a little bit different here than where we were in January of 2024 because this runup actually has a probability to see massive growth in earnings. I mean, Lisa Sue mentioned with the OpenAI deal that you can expect billions of dollars and both accredited to earnings with these recent deals with OpenAI."

The speaker reviews AMD's high forward PE ratio relative to its historical benchmark and explains that unlike previous high-valuation periods, the current run-up is driven by significant catalysts, including an OpenAI deal and a large Oracle order. These factors are expected to drive earnings growth and narrow valuations in the near future.

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