AMD Up 24% In A Day. Do You Buy Or Wait?
Advanced Micro Devices (AMD) stock is up 23.7% in a day. The stock now looks expensive and the question is – what is the risk? Can it crash? Consider the following data:
- Size: A $331 Bil company with $30 Bil in revenue currently trading at $203.71.
- Fundamentals: Last 12 month revenue growth of 27.2% and operating margin of 8.3%.
- Liquidity: Has Debt to Equity ratio of 0.01 and Cash to Assets ratio of 0.08
- Valuation: Currently trading at P/E multiple of 116.7 and P/EBIT multiple of 133.5
- Has returned (median) 17.4% within a year following sharp dips since 2010. See AMD Dip Buy Analysis.
While we like to ride the momentum if the fundamentals check out – for AMD, see Buy or Sell AMD Stock – we are wary of bull traps. Specifically, it is worth trying to answer if things get really bad, and AMD drops 20-30% to $143 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience. Turns out, the stock has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
AMD stock has jumped meaningfully recently and we currently find it relatively expensive. While this may feel like an opportunity, there is significant risk in relying on a single stock. On the other hand, there is a huge value to a broader diversified approach we take with Trefis High Quality Portfolio. Let us ask you this: Over the last 5 years, which index do you think the Trefis High Quality Portfolio outperformed – the S&P 500, Nasdaq, or both? The answer might surprise you. See how our advisory framework helps stack the odds in your favor.
Below are the details, but before that, as a quick background: AMD provides x86 microprocessors, accelerated processing units, chipsets, discrete and integrated GPUs, data center and professional GPUs, and development services across computing, graphics, enterprise, embedded, and semi-custom segments.
- Advanced Micro Devices Stock Surged 120%, Here’s Why
- Advanced Micro Devices Stock To $143?
- Would You Still Hold Advanced Micro Devices Stock If It Fell Another 30%?
- Advanced Micro Devices Stock To $164?
- How Advanced Micro Devices Stock Gained 80%
- Pay Less, Gain More: MU Tops Advanced Micro Devices Stock
2022 Inflation Shock
- AMD stock fell 65.4% from a high of $161.91 on 29 November 2021 to $55.94 on 14 October 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 18 January 2024
- Since then, the stock increased to a high of $211.38 on 7 March 2024 , and currently trades at $203.71
| AMD | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -65.4% | -25.4% |
| Time to Full Recovery | 461 days | 464 days |
2020 Covid Pandemic
- AMD stock fell 34.3% from a high of $58.90 on 19 February 2020 to $38.71 on 16 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 22 July 2020
| AMD | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -34.3% | -33.9% |
| Time to Full Recovery | 128 days | 148 days |
2018 Correction
- AMD stock fell 49.1% from a high of $32.72 on 14 September 2018 to $16.65 on 24 December 2018 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 10 June 2019
| AMD | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -49.1% | -19.8% |
| Time to Full Recovery | 168 days | 120 days |
2008 Global Financial Crisis
- AMD stock fell 91.2% from a high of $20.35 on 1 January 2007 to $1.80 on 25 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 21 August 2018
| AMD | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -91.2% | -56.8% |
| Time to Full Recovery | 3556 days | 1480 days |
Worried that AMD could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.