NASDAQ:AMD Stock Analysis – Can It Rebound from Its Recent Lows?
AMD’s Stock Faces Heavy Selling, But is the Market Overreacting?
Advanced Micro Devices, Inc. (NASDAQ:AMD) has seen its stock price take a beating over the last several months, plummeting from highs of $227 in March 2024 to its current levels near $102. The semiconductor giant is facing a turbulent market where investor sentiment has turned sharply against it, but is this justified? With its growing dominance in the data center and AI chip market, strong financials, and a valuation that appears increasingly attractive, is AMD stock a buy at these depressed levels?
AMD’s AI Accelerator and Data Center Expansion Poised for Growth in 2025
One of the most compelling reasons to stay bullish on AMD stock is the explosive growth in its data center and AI accelerator businesses. The company’s EPYC server processors and Instinct GPUs have gained significant traction in data centers, with a 69% year-over-year revenue increase in the latest quarter. AI workloads are the backbone of AMD’s future, and the company is aggressively expanding its MI325X and MI350X AI accelerator deliveries in 2025.
Revenue for AMD’s data center division hit $3.9 billion in Q4 2024, marking a 74% increase in operating profits from the segment. The data center division now accounts for 57% of AMD’s total operating income, proving that this business is becoming the company’s primary revenue driver.
Yet, despite this, the market is pricing AMD stock at a significant discount to its biggest rival, Nvidia (NASDAQ:NVDA). While NVDA trades at 21.9x forward earnings, AMD is currently trading at just 15.8x forward EPS, despite expectations for 35% profit growth in 2025. Investors who believe AMD will continue capturing market share in the AI chip space may see this valuation as an opportunity.
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Has AMD's Stock Selloff Created a Buying Opportunity?
The market reaction to AMD's Q4 earnings report was disappointing, despite the company beating estimates with $1.09 EPS vs. $1.08 expected and $7.7 billion in revenue, up 24% YoY. Investors appear skeptical about AMD’s ability to challenge Nvidia’s dominance in AI chips, but this perception may not reflect reality.
AMD’s MI325X accelerators are seeing strong adoption, and the upcoming MI350X lineup in late 2025 could significantly enhance its competitive position. The company’s forward-looking AI roadmap suggests it could double its AI accelerator market share in the next two years, further boosting revenue.
Yet, the stock has been hammered by broader semiconductor sector concerns, including China trade tensions, AI demand uncertainty, and investor profit-taking after last year’s massive rally in chip stocks. Despite these risks, AMD’s business fundamentals remain strong, and analysts still project over 40% EPS growth in 2025.
AMD vs. Nvidia – Why the Valuation Gap Might Not Last
Comparing AMD and Nvidia, the valuation gap between the two chipmakers is at historic levels. Nvidia has been riding a massive wave of optimism following its AI dominance, but AMD is now catching up in key areas like data center CPUs, AI accelerators, and high-performance computing (HPC).
Even though Nvidia still leads in the AI accelerator market, AMD’s data center revenue is growing faster than Nvidia’s, yet the market has not rewarded AMD for this outperformance. With AMD’s Instinct GPUs gaining adoption, the valuation gap could narrow, which would drive AMD’s stock price significantly higher.
AMD’s operating income grew by 43% YoY in Q4 2024, and the company is expected to deliver $6.34 EPS in 2026, reflecting a 35% YoY increase. Nvidia, meanwhile, is forecasted to post 27% EPS growth, yet it is trading at a much higher multiple.
If AMD can execute well on its AI and data center strategy, investors may soon realize that the stock is deeply undervalued compared to Nvidia, making this a potential buying opportunity at current levels.
Key Technical Levels to Watch – Is AMD Stock Nearing a Breakout?
AMD’s stock has been testing critical support levels near $100-$102, a zone where buyers have historically stepped in. If AMD can hold above this support, it could trigger a rebound toward $120-$130 in the near term.
Key resistance levels to watch include $115 and $130, while a break below $100 could open the door for a further decline toward $90. However, given strong institutional buying at these levels, it seems likely that AMD has found a bottom and is preparing for a potential recovery rally.
Earnings and Valuation – Where Is AMD Heading in 2025?
AMD’s 2025 revenue forecast remains strong, with expected revenue of $31-$32 billion, up 22% YoY. The company is also maintaining healthy gross margins of around 54%, which will support strong EPS growth of over 40%.
With an expected forward P/E of just 15.8x, AMD looks deeply undervalued compared to both Nvidia (21.9x P/E) and the broader semiconductor sector. If AMD can hit its revenue and AI chip targets in 2025, the stock could re-rate toward a more reasonable valuation multiple of 20x-25x earnings, implying significant upside potential.
Is AMD Stock a Buy, Sell, or Hold?
Given the current valuation, strong AI growth potential, and improving financials, AMD stock looks like a compelling buy near 52-week lows. The market is significantly underestimating AMD’s AI expansion, and if the company successfully executes its data center and AI accelerator strategy, the stock could see massive upside in 2025.
However, investors should remain cautious about China-related risks, AI market volatility, and macroeconomic factors that could pressure the stock in the short term. But for long-term investors, the current price levels present an attractive entry point.
With AMD trading at a deep discount to Nvidia, yet growing its data center and AI businesses at a rapid pace, this could be one of the best risk-reward opportunities in the semiconductor space.
