If you are wondering whether Advanced Micro Devices at around $215 a share is still a smart buy or if the big gains are largely behind it, you are not alone. This is exactly the question we are going to unpack.
The stock is up 8.5% over the last week and 78.3% year to date, building on a 70.3% gain over the past year and a 243.7% return over three years that has reset expectations and risk perceptions for investors.
Recent headlines have focused on AMD expanding its presence in artificial intelligence and data center chips, including aggressive pushes to challenge Nvidia in AI accelerators and deepen partnerships with major cloud providers. At the same time, ongoing coverage around chip supply chains, US semiconductor policy, and competitive dynamics in GPUs and CPUs has kept AMD firmly in the spotlight and helped fuel the latest moves.
On our checklist of undervaluation signals, AMD currently scores a 3/6 valuation score. This means half of the tests suggest the market may be underpricing some aspects of its fundamentals. Next we will break down how different valuation methods look at those signals before circling back to a more nuanced way of thinking about what AMD is really worth.
A Discounted Cash Flow model estimates what a company is worth today by projecting the cash it can generate in the future and then discounting those amounts back to a present value.
For Advanced Micro Devices, the latest twelve month free cash flow is about $5.6 billion. Analysts see that rising sharply, with projections stepping up to roughly $7.2 billion in 2026 and $12.4 billion in 2027, before extrapolated estimates climb further to around $27.9 billion by 2029 and over $59 billion by 2035. Simply Wall St uses a 2 Stage Free Cash Flow to Equity model, combining these analyst forecasts with longer term growth assumptions to map out the next decade of cash flows.
When those projected cash flows are discounted back to today, the model arrives at an intrinsic value of roughly $302 per share. Compared with a current price near $215, this implies AMD trades at about a 28.8% discount to its DCF based fair value. This suggests potential upside if the projected cash flow path occurs as modeled.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Advanced Micro Devices is undervalued by 28.8%. Track this in your watchlist or portfolio, or discover 904 more undervalued stocks based on cash flows.
AMD Discounted Cash Flow as at Dec 2025
For profitable companies like Advanced Micro Devices, the Price to Earnings ratio is a useful way to think about valuation because it directly links what investors pay for each share to the profits the business is currently generating. In general, faster growth and lower risk justify a higher PE, while slower growth and higher uncertainty should command a lower, more conservative multiple.
AMD currently trades at around 111.8x earnings, well above the broader semiconductor industry average of about 36.5x and also richer than its peer group average near 58.8x. Simply Wall St goes a step further with its Fair Ratio, an estimate of what a normal PE should be for AMD given its earnings growth outlook, profitability, size, industry and risk profile. For AMD, that Fair Ratio sits at roughly 64.8x, which is already demanding but still meaningfully below the current market multiple.
This suggests that, even after accounting for AMD short term growth potential and competitive position, the stock trades at a premium to what its fundamentals justify on an earnings basis.
Result: OVERVALUED
NasdaqGS:AMD PE Ratio as at Dec 2025
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Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple framework that lets you turn your view of Advanced Micro Devices into a clear story behind the numbers by connecting your assumptions about future revenue, earnings and margins to a specific fair value estimate.
A Narrative starts with the company story you believe, links that story to a financial forecast, and then translates the forecast into a fair value you can compare with today’s share price to consider whether AMD looks like a buy, a hold, or a sell.
On Simply Wall St, Narratives are an easy, accessible tool inside the Community page, where millions of investors share different AMD outlooks that update automatically as new news, earnings and guidance come in, so the stories and the numbers stay current without you having to rebuild your model.
For example, one bullish AMD Narrative on the platform assumes rapid AI data center adoption and arrives at a fair value near $362 per share, while a more cautious Narrative, focused on export controls and margin pressure, lands closer to $137, showing how the same company can justify very different decisions depending on the story you believe.
For Advanced Micro Devices however we will make it really easy for you with previews of two leading Advanced Micro Devices Narratives:
🐂 Advanced Micro Devices Bull Case
Fair value estimate: $283.57 per share
Implied undervaluation vs current price: 23.9%
Assumed annual revenue growth: 34.73%
Frames AMD as a long term AI and data center winner, with multiyear accelerator and CPU ramps driving sustained double digit revenue and margin expansion.
Builds in rising profitability, with margins moving above 20% as AI, data center, and adaptive computing scale, while operating leverage improves over time.
Sees recent AI supercomputer and hyperscaler agreements as catalysts that justify a premium multiple and a fair value well above the current share price.
🐻 Advanced Micro Devices Bear Case
Fair value estimate: $193.68 per share
Implied overvaluation vs current price: 11.0%
Assumed annual revenue growth: 18.84%
Highlights intense competition from Nvidia, Intel, ARM based designs, and custom silicon, which could limit AMD AI share gains and pressure pricing.
Stresses execution, supply chain, and geopolitical risks, including reliance on TSMC and export restrictions, as potential brakes on growth and margins.
Argues that while AMD has strong long term AI and data center potential, today’s valuation already prices in much of that upside, leaving less room for error.
Do you think there’s more to the story for Advanced Micro Devices? Head over to our Community to see what others are saying!
NasdaqGS:AMD 1-Year Stock Price Chart
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include AMD.
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