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Advanced Micro Devices (AMD) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
·3 mins read

Advanced Micro Devices (AMD) closed at $79.48 in the latest trading session, marking a +1.83% move from the prior day. This move outpaced the S&P 500's daily gain of 1.61%. At the same time, the Dow added 1.51%, and the tech-heavy Nasdaq gained 1.87%.

Prior to today's trading, shares of the chipmaker had lost 6.86% over the past month. This has lagged the Computer and Technology sector's loss of 4.69% and the S&P 500's loss of 4.08% in that time.

Investors will be hoping for strength from AMD as it approaches its next earnings release. On that day, AMD is projected to report earnings of $0.36 per share, which would represent year-over-year growth of 100%. Our most recent consensus estimate is calling for quarterly revenue of $2.56 billion, up 42% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $1.10 per share and revenue of $8.89 billion, which would represent changes of +71.88% and +32.03%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for AMD. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. AMD is currently sporting a Zacks Rank of #3 (Hold).

Looking at its valuation, AMD is holding a Forward P/E ratio of 70.8. This valuation marks a premium compared to its industry's average Forward P/E of 19.32.

It is also worth noting that AMD currently has a PEG ratio of 1.55. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Electronics - Semiconductors was holding an average PEG ratio of 1.65 at yesterday's closing price.

The Electronics - Semiconductors industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 74, putting it in the top 30% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow AMD in the coming trading sessions, be sure to utilize Zacks.com.


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