A Realistic Valuation Of AMD Shares

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About: Advanced Micro Devices, Inc. (AMD)
by: Kwan-Chen Ma
This article is exclusive for subscribers.
Kwan-Chen Ma
Long/short equity, value, Growth, bonds
Summary

Shares of Advanced Micro Devices (AMD) have gained 80% and 150% in 2018 and 2019, respectively. But AMD’s actual financials have not nearly arrived on the same order.

The market has priced in a momentum factor which is from the expectation of AMD’s ability to gain meaningful CPU market shares in the near future.

For a momentum stock, AMD investors tend to overweight future distant revenue, or future market share gains.

At $46, AMD share is mildly overvalued by $3 after the momentum being considered.

If the price premium is a result of positive sentiment,  AMD sentiment value tends to reverse itself in 2-3 weeks.

Shares of Advanced Micro Devices (NASDAQ:AMD) have gained 80% and 150% in 2018 and 2019, respectively, where company's actual fundamentals have not nearly arrived on the same order. Such discrepancy may imply that