The Rock Trading Group
CMT, Technical/Situational Analysis, Options Trading
AMD looks likely to fall after its May 5 earnings, as it has risen on earnings only once in the last nine reports and dropped from $240 to $192 after the last one. The long-term growth outlook is fine, and AMD has outperformed Nvidia from around $100, but chasing it near $300 makes no sense. x.com x.com x.com x.com
AMD is no longer cheap after surpassing the $600 base case originally set for 2029 while it is still 2026. At a 55x forward P/E the market is paying up for its big growth, even though consistent beats and sharply raised long-term guidance show the model working and analysts likely still underestimate its earnings power. It is a hold here, not a buy. x.com
AMD is the textbook example of a stock with too much priced into its valuation: it delivered flawless earnings and still sold off. x.com
AMD is held for its strong earnings growth, which, when it continues into the next quarter, is a reason to own a company beyond a good-looking chart. Price and risk then decide whether to take the trade. x.com
AMD's strong quarter turned into a sell-the-news drop because expectations were too high and capex far exceeded estimates. Q2 revenue was $11.54B versus $11.31B expected, data center revenue rose 107% to $6.72B, and Q3 guidance of about $13B beat $12.5B. But capex hit $808M versus $299M expected, about 171% higher, and the stock had already priced in MI450, Helios, AI GPU and server CPU growth, falling about 7% after hours. x.com x.com
AMD's stock has outrun its fundamentals, leaving it a bad investment at today's price despite an extremely bullish long-term outlook for the business. From April 2025 to September 2026, AMD rose 8x while revenue grew 55%; Nvidia rose 2.4x while revenue grew 118%. AMD had previously lagged despite improving fundamentals, but the market's catch-up went too far. Its risk/reward is no longer what it was at roughly 20x forward earnings in 2025; a crash could make it attractive again. x.com x.com
Skipping AMD's dip would be a mistake given broad analyst buy support on Stock Analysis. Its snapshot shows 39 Strong Buy and five Buy ratings among 55 analysts while shares are down 6%. x.com
AMD's fundamentals are very strong, but about 50x 2028 estimated earnings is a price that cannot be normalized for any company, under an investment philosophy that may be wrong. Per PrivPubInvestor, the stock rose from $450 to almost $650 in two weeks on CPU demand, analyst price-target hikes, new partnerships and the Helios rollout. x.com x.com
AMD may be the biggest asymmetry in semiconductors: a more than 2.5x valuation premium to NVIDIA for half the growth and no moat is hard to justify. When the market turns against AMD and AI momentum funds, the drop will come all at once and get nasty. x.com
AMD should climb higher in time, but the stock is running ahead of its execution for now. With no clear view of near-term direction, cutting exposure is pure risk management. x.com x.com x.com
AMD's numbers remain mediocre, and the stock already trades at what it would earn in 2027 and beyond. @JonahLupton argues AMD is a 2027 story, when growth is expected to accelerate to 60-65% year over year. x.com x.com
