How Much Can AMD’s Stock Move In 2018?

January 25th, 2018 by Trefis Team
-6.76%
Downside
155
Market
145
Trefis
AMD: Advanced Micro Devices logo
AMD
Advanced Micro Devices

Unlike 2016, when AMD’s (NYSE:AMD) market price grew nearly four-fold, 2017 was more of a roller coaster for the company’s stock. The price remained largely rangebound, but there are still positive expectations for AMD’s EPYC and Ryzen processors, and it remains to be seen how the company counters Nvidia in the data center GPU market. AMD certainly has the technical knowhow to do so. If some of these expectations pan out, AMD’s earnings – and likely its valuation – could find some room to grow further this year. We have created an interactive valuation calculator dashboard using Trefis’ interactive technology where you can modify inputs such as EBITDA multiples and fundamentals determining AMD’s 2018 EBITDA (earnings before interest, taxes, depreciation and amortization).

Our base case gives a $15.50 price estimate for AMD, assuming that the company’s EBITDA multiple will decline to nearly 18 compared to 23 for 2017, and its EBITDA for 2018 will surpass $800 million. We estimate that AMD’s Computing and Graphics EBITDA  for 2018 will hit $400 million mark, equaling the figure for its Enterprise, Embedded and Semi-Custom Group. These forecasts are based on the assumption that AMD will see strong revenue growth along with meaningful margin expansion. We expect this to be driven by adoption of EPYC and Ryzen processors, price increases and higher demand for Radeon GPUs. If you have a different view, go to our  interactive valuation calculator dashboard and modify the assumptions (blue dots) to come up with your own price estimate for AMD.

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