Advanced Micro Devices Stock Rallied 37% In A Week. Have You Fully Evaluated The Risk?

Advanced Micro Devices (AMD) stock is up 37.2% in 5 trading days. The stock now looks expensive and the question is – what is the risk? Can it crash? Consider the following data:

• Size: Advanced Micro Devices is a $378 Bil company with $30 Bil in revenue currently trading at $232.89.
• 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: Advanced Micro Devices stock is currently trading at P/E multiple of 133.4 and P/EBIT multiple of 152.6
• 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 $163 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. Should you buy one stock you like or build a portfolio designed to win across cycles? Our numbers show that High Quality Portfolio has turned stock-picking uncertainty into market-beating consistency. This portfolio is incorporated in asset allocation strategy of Empirical Asset Management – a Boston area wealth manager and Trefis partner – whose asset allocation framework yielded positive returns during the 2008-09 period when the S&P lost more than 40%.

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.

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 $235.56 on 8 October 2025 , and currently trades at $232.89

 
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

 
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

 
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

 
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.