• Investors may be wondering if Advanced Micro Devices at US$516.10 is still worth their attention after such a strong run, or if the price is racing ahead of the underlying value.
• The stock has posted returns of 10.4% over the past week, 43.1% over the past month, 130.9% year to date and 366.1% over the past year. These figures naturally raise questions about how much future upside is already reflected in the price.
• Recent headlines have focused heavily on Advanced Micro Devices as a key player in the AI and high performance computing space, with investors closely watching product launches and partnerships in data centers and accelerators. This attention helps explain why the stock price has been so active, even as opinions differ on what counts as a reasonable valuation.
• Simply Wall St currently assigns Advanced Micro Devices a valuation score of 1/6. The rest of this article will walk through the main valuation approaches behind that result and then finish with a more complete way to think about value that goes beyond a single score.

Advanced Micro Devices scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Advanced Micro Devices Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a stock could be worth by forecasting the cash the company may generate in the future, then discounting those cash flows back into today’s dollars.

For Advanced Micro Devices, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is about $8.7b. Analysts have provided free cash flow estimates for several years, and beyond that Simply Wall St extrapolates those forecasts. By 2030, the model is using an annual free cash flow figure of about $41.9b, with discounted values supplied for each year from 2026 to 2035.

Adding up all those discounted cash flows gives an estimated intrinsic value of $353.57 per share. Compared with the recent share price of $516.10, the DCF output suggests the stock is about 46.0% above this estimate, which indicates a relatively rich valuation on this model.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Advanced Micro Devices may be overvalued by 46.0%. Discover 46 high quality undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Advanced Micro Devices Price vs Sales

For a profitable, revenue generating company, the P/S ratio is a useful way to think about how much investors are paying for each dollar of sales. It is especially common for fast growing chip companies where earnings can be more volatile than revenue.

What counts as a reasonable P/S ratio usually depends on how fast revenue is expected to grow and how risky those cash flows look. Higher expected growth or lower perceived risk often goes with a higher “normal” multiple, while slower growth or higher risk tends to justify a lower one.

Advanced Micro Devices currently trades on a P/S of 22.47x. That is above the broader Semiconductor industry average P/S of 8.84x and also above the peer average of 16.62x. Simply Wall St’s Fair Ratio, which is its estimate of what a justified P/S might be given factors like earnings growth, margins, industry, market cap and risk profile, is 31.01x.

This Fair Ratio is more tailored than a simple comparison with peers or the industry because it attempts to reflect the company’s specific growth outlook, profitability, scale and risks in one number. On that basis, the current 22.47x P/S sits below the 31.01x Fair Ratio, which indicates that the stock appears undervalued on this metric.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Advanced Micro Devices Narrative

Earlier it was mentioned that there is an even better way to think about valuation. This is where Narratives come in, a simple tool on Simply Wall St’s Community page that lets you attach a story about Advanced Micro Devices. For example, one Narrative might assume a Fair Value of US$89.00 while another uses US$450.00 or US$441.58. You can then link that story to your own revenue, earnings and margin assumptions, compare the resulting Fair Value to the current US$516.10 share price to decide whether the stock looks expensive or cheap to you, and have those Fair Values update automatically when new earnings, news or AI deal terms appear.

Do you think there's more to the story for Advanced Micro Devices? Head over to our Community to see what others are saying!

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.