uploads///AMD revenue growth

Will History Repeat Itself for AMD Stock?

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Sep. 18 2018, Published 12:05 p.m. ET

AMD stock has skyrocketed lately

Advanced Micro Devices (AMD) has been on a roll lately. While other tech stocks have been falling, the chip maker’s stock has gained a whopping 70% in the past month. The stock has more than tripled in value YTD (year-to-date). It’s now trading at a 12-year high.

The stock has been surging on the back of AMD’s massive end markets. It makes the technology that powers a variety of rapidly growing areas, including the AI and data center spaces.

As the graph above shows, the company’s revenue growth has been accelerating quickly in the last few quarters. Markets reward growth stories heavily these days.

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Is AMD close to its peak?

Historically, AMD stock has had similar meteoric rises on two occasions: in 2000 and in 2006. On both those occasions, the stock crashed and stayed low for a long time.

The same thing may not necessarily happen this time around. Wall Street expects AMD to become even more profitable over the next few quarters. However, Intel (INTC) is slated to launch its next-generation chips next year. If Intel releases an impressive line-up of chips, AMD could take a hit.

AMD’s current valuation may not be palatable to investors, especially if Intel and NVIDIA (NVDA), which have much deeper pockets, up their game.

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