AMD shares have climbed nearly 200% this year, but Motley Fool contributor Keithen Drury says the stock’s valuation is stretched: he puts its forward P/E at 40 using 2027 earnings estimates and expects returns to trail Nvidia and Broadcom in coming years.
The article links a recent boost to AMD shares to reports that the company plans to raise prices by 10% in Q4. Drury says AMD’s data-center business grew 107% year over year in Q2, compared with 117% for Nvidia; Broadcom’s Q3 AI semiconductor revenue rose 221%.
Drury says AMD shares could plunge or deliver low returns for a long time as the company grows into its valuation. He says he is unsure which outcome will occur, but recommends favoring Nvidia and Broadcom. Drury disclosed positions in both companies; The Motley Fool disclosed positions in and recommendations for AMD, Nvidia and Broadcom.
