Is AMD a long term investment?
Purchasing AMD is suitable only for those with a long-term investment horizon. The Motley Fool has positions in and recommends Advanced Micro Devices, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft.
Analysts foresee AMD's EPS reaching $2.62 in fiscal 2024, up 31.7% annually, and rising to $4.40 in fiscal 2025, a 67.9% increase. Last week, AMD's quarterly results met expectations, with revenue in line and updated guidance as forecasted.
According to its 5-year AMD stock forecast, the stock can reach $250,59 in May 2029. As far as an AMD stock forecast for 2030 is concerned, Coincodex has the stock reaching $3,456.98 if it maintains its current 10-year average growth rate.
AMD looks likely to hit $1 trillion by 2030
For AMD to more than triple in value in about six years isn't all that unlikely given the promising opportunities in the AI chip market.
Analysts estimate AMD will earn $3.41 per share in 2024, up 28% from 2023. Additionally, estimates call for annual earnings growth averaging 33% for the next three to five years, which makes sense if AMD's Data Center and Client units continue to grow and successfully accelerate AMD's broader growth.
The Bottom Line
In conclusion, both AMD and Nvidia are well positioned in the GPU and AI segments. However, considering Nvidia's dominant position in the data center market, stellar financial performance, and lower valuation multiples, it may be a more attractive investment option compared to AMD.
History and trends in the tech market suggest it isn't too late to invest long-term in AMD. However, there are better options for now that could offer more reliability and value. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia.
To answer your question - assuming that AMD can keep on innovating and keep on pushing themselves to return around 25% year on year returns, you're looking at 9 years to hit $1000. That is assuming the price follows the returns the company makes exactly. AMD price has been doubling (more or less) since 2017.
AMD has a solid outlook over the long term, and earnings-per-share (EPS) estimates seem to support this. The table above shows AMD's earnings could hit just above $7 per share over the next two fiscal years. Multiplying this figure by the company's forward price-to-earnings ratio of 55 yields a stock price of $396.
Based on analyst ratings, Advanced Micro Devices's 12-month average price target is $191.57. Advanced Micro Devices has 5.48% upside potential, based on the analysts' average price target. Advanced Micro Devices has a consensus rating of Strong Buy which is based on 29 buy ratings, 7 hold ratings and 0 sell ratings.
Can AMD reach $200?
Today's take-away is that AMD should benefit from growth in the markets for AI chips and supercomputers. AMD's valuation may be a concern for some investors, but it doesn't have to be a deal breaker. Don't expect the AMD share price to reach $190 or $200 very soon.
AMD staged an amazing turnaround after bottoming in 2015, fueled by new products and improved profitability. And AMD stock rocketed over the next six years. But it slumped starting in late 2021 during a cyclical decline in personal computer sales.
Stock Price Forecast
The 29 analysts with 12-month price forecasts for AMD stock have an average target of 198.31, with a low estimate of 145 and a high estimate of 265. The average target predicts an increase of 27.31% from the current stock price of 155.77.
AMD's long-term outlook
The AI sector is expected to hit $184 billion in 2024, up from $136 billion last year and expanding to $827 billion by 2030. This industry growth is reflected in the sales of AMD's AI chips, which are steadily rising.
But its forward sales multiple of 10 is closer to the five-year average and points toward an improvement in its top line. So, if AMD manages to hit $40 billion in sales in 2026 and trades at 10 times sales at that time, its market cap could increase to $400 billion. That would be a 30% jump from current levels.
NASDAQ: AMD
With a 90% market share, Nvidia (NVDA -2.61%) reigns as the undisputed King of the Artificial Intelligence (AI) chip market.
According to analysts, AMD price target is 191.62 USD with a max estimate of 250.00 USD and a min estimate of 125.00 USD.
Nvidia is the undisputed AI leader commanding more than 90% market share in data-center GPUs and more than 80% market share in AI processors. AMD, although not in the leagues of Nvidia, is upping its game with new AI products.
AMD stock has received a consensus rating of buy. The average rating score is and is based on 84 buy ratings, 14 hold ratings, and 0 sell ratings.
Additionally, AMD's strategic roadmap and its commitment to innovation are expected to bolster its presence in the burgeoning artificial intelligence (AI) field, which presents a significant multi-billion-dollar growth opportunity.
What is the fair value of AMD?
As of 2024-07-20, the Fair Value of Advanced Micro Devices Inc (AMD) is 17.26 USD. This value is based on the Peter Lynch's Fair Value formula. With the current market price of 151.58 USD, the upside of Advanced Micro Devices Inc is -88.6%.
AI is only one market requiring high-powered chips, with AMD also benefiting from chip demand from video games, automotive, cloud computing, and more. AMD has made many millionaires over the years, with its shares up 3,500% since 2014.
According to the latest TipRanks data, approximately 30.73% of Advanced Micro Devices (AMD) stock is held by retail investors. Who owns the most shares of Advanced Micro Devices (AMD)? Vanguard owns the most shares of Advanced Micro Devices (AMD).
Appearing quite undervalued compared to its peers, Advanced Micro Devices (NASDAQ:AMD) is in a strong position AI-wise. Just like Nvidia, AMD benefits from growing investor interest in AI chips. The market also expects AMD stock to reach $265 or above, showing potential growth.
In AMD's fourth quarter of 2023, the company beat Wall Street estimates on revenue and met forecasts for earnings per share. However, weaker-than-expected guidance for 2024's first quarter illustrates why the company's stock is best for long-term-minded investors.
