Advanced Micro Devices Inc. Technical Analysis - Advanced Micro Devices Inc. Trading: 2024-09-24

Advanced Micro Devices, Inc. is an American corporation engaged in designing and manufacturing of processors and graphics processing units (GPUs). Nvidia currently dominates the market for GPUs used for running computationally intensive AI workloads. But AMD's Instinct MI300 series accelerators provide a viable alternative to Nvidia's current H100 GPU, analysts say. AMD chief Lisa Su noted that while GPUs remain the top choice for large language models due to their efficiency in parallel processing, the future will likely see a shift toward a broader range of chip architectures. Recent reports indicated AMD is focusing on the mainstream and mid-range GPUs, abandoning the premium gaming GPU market led by Nvidia that helped Nvidia reach a trillion-dollar valuation. To help with setting a perspective, it should be noted that large cloud providers like Amazon and Google have developed their custom AI chips for internal use. It looks like AMD is abandoning efforts to catch up Nvidia in premium gaming GPU market which was instrumental in Nvidia’s dash to a leading name in the development of AI chips. It is not clear if the shift in AMD strategy to the mainstream and mid-range GPUs and planning to capitalize on a shift in large machine learning models toward a broader range of chip architectures will be really successful. Meantime AMD’s market capitalization rose to $253.7 billion from $161.8 billion in May 2022. At the same time its valuation has stretched: Forward P/E ratio has risen to 29.41 from of 21.10 in May 2022. And according to AMD's latest financial reports and stock price the company's current price-to-earnings ratio (Trailing Twelve Months) is 1306.25. At the end of 2022 the company had a P/E (TTM) ratio of 72.8. High valuation is a downside risk for a company stock. However, the current setup is bullish for AMD stock price.