AMD's Stock Just Did Something It Hasn't Done Since 2023

Core Viewpoint - AMD's stock has experienced a decline of approximately 10% since the emergence of a Chinese AI start-up, DeepSeek, which has raised concerns in the technology sector, particularly affecting chip stocks [2][3] Valuation Analysis - AMD's forward price-to-earnings (P/E) ratio is currently at 25.6, which is comparable to the levels seen in September 2023, while its market capitalization has increased by roughly $30 billion over the past 15 months [5][8] - The forward P/E ratio indicates that analysts are projecting a proportional rise in future earnings relative to the increase in AMD's share price, resulting in a flat forward P/E multiple [8][10] Performance Insights - AMD's data center business grew by 94$12.6 billion last year, showcasing significant operating leverage and widening profit margins, although sluggish growth in gaming and embedded units is impacting overall revenue [7][9] - The market appears to be valuing AMD's data center operating income at approximately 10x, suggesting that the company's valuation has increased by about $30 billion since September 2023 [10] Competitive Positioning - AMD's data center business is expected to become increasingly valuable, especially as it gains traction with major cloud hyperscalers like Microsoft and tech giants such as Meta Platforms, which are also Nvidia customers [11][12] - The current valuation of AMD is seen as significantly discounted compared to Nvidia, presenting a potential investment opportunity [12]