The stock market started an interesting start to this year. During the first few weeks of 2025, technological supplies particularly showed similar swing levels seen in the last two years – to greatly thanks to the constant support of the artificial intelligence story (AI).
However, the euphoria stopped at the end of January after the Chinese start called Deepseek released the AI model similar to Openai’s Chatgpt.
What surprised investors was that Deepseek claims to have built his Ai for far less than what spends openii, anthrop, athlete, and other AI start-up in the US. Not surprisingly, technology supplies have dropped abruptly in the last few weeks. In particular, the supplies of the chips are really swinging.
Ever since the news of Deepseek started picking up at the end of January, shares Advanced micro devices(NASDAQ: AMD) They fell by about 10%. Below, I will analyze some interesting trends in assessing AMD -Ai to investigate whether now is the right time to buy shares of the chip leader.
The evaluation metric that I consider to be useful is forward price to earnings multiple (p/e). This ratio takes into account what analysts on Wall Street forecast for future company earnings, which can help give insight into how experts in the industry look at the prospect of company growth compared to their peers.
In the table below, I summarized AMD’s advanced p/e and market capitalization of a quarter of the last year.
Category
30.9.2023
31.12.2023
31.3.2024
30.6.2024
30.9.2024
Current
Forward p/e
24.6
39.4
53.8
47.4
30.1
25.6
Market capitalization
$ 166 billion
$ 238 billion
$ 292 billion
$ 262 billion
$ 265 billion
194 billion dollars
Data Source: Yahoo! Financing
AMD’s forward P/E of 25.6 is basically in accordance with the levels seen in September 2023. The key difference I see is that the market capitalization of the company has grown by about $ 30 billion during this 15-month period.
Picture source: Getty Images.
The Slijnik down breaks the revenue of AMD -Ai Operational income for 2024. In my eyes, the most important detail in this diamond is an operation of the company data center because this segment is most competing Nvidia.
Image source: Investor relationships.
Last year, AMD -O’s data center increased by 94% to $ 12.6 billion. More importantly, the company generates significant operational influences in this business as seen in the increasing margin of profit. Unfortunately, slow growth from AMD games and built -in units withdraws to the total level of company revenue and profit – and I think investors are inserted.
The closeness of the AMD between September and September 2023 implies that analysts model the proportional increase in future earnings compared to increasing the price of AMD shares for the last year or something. For this reason, multiple companies basically remained flat instead of expanding.
In other words, I think analysts model both continuous growth in the data center business and Constantly slowing through playing and built -in chips – thus balanced by the overall picture of the company. Personally, I am not fully aligned with such an approach. On the scale, I think it will accelerate revenues and profit from AMD’s business with the data center will far be exceeded by other segments that are not part of the GPU.
The way I currently see an assessment of AMD is that the market seems to apply more than approximately 10x to the operating revenue of the Data Center -therefore, the AMD value has increased by about $ 30 billion from September 2023.
I think that AMD data center is a long -term worth of $ 30 billion. Nvidia -in’s business business and networking is much higher than AMD, and investors have witnessed a historic increase in NVIDIA shares prices for most for the last two years -adding more trillion of the company estimation.
Given that AMD already notices the adoption of its MI 300 accelerator with cloudy hypersalers like Microsoft and technological behemots like Meta platform (Both are Nvidia customers), I am a bull that will appear as a legitimate force in the Empire of the Data Center before and later.
I now see as an entry opportunity to take advantage of AMD prices, because I see that the assessment of the company is massively discounted compared to Nvidia.
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Randa Zuckerberg, former director of the development of the market and spokeswoman for Facebook and sister of Meta Platform Executive Director Mark Zuckerberg, is a member of the Board of Directors Motley Fool. Adam Spaccoco There are positions in meta platforms, Microsoft and Nvidia. Motley Fool has positions and recommends advanced micro devices, meta platforms, Microsoft and Nvidia. Motley Fool recommends the following options: Long January 2026 $ 395 calls Microsoft and short January 2026. $ 405 calls to Microsoft. Motley Fool has disclosure rules.
