AMD Plunges 17% in a Month: Is the Stock Worth Buying on the Dip?

Performance and Market Position - AMD shares lost 17.1% in the past month, underperforming the Zacks Computer & Technology sector's return of 0.9% [1] - AMD shares lagged behind NVIDIA (9.5%) and Intel (4.2%) in the past month [1] - AMD's near-term prospects are dull due to weakness in the Embedded segment and stiff competition from NVIDIA [13] Financial Estimates and Growth - AMD expects Q4 2024 revenues of $7.5 billion (+/-$300 million), representing YoY growth of 22% and sequential growth of 10% [2] - The Zacks Consensus Estimate for Q4 2024 earnings is $1.06 per share, down 2.8% over the past 30 days, suggesting 37.66% YoY growth [4] - The consensus mark for Q4 2024 revenues is $7.51 billion, indicating 21.82% YoY growth [4] - The Zacks Consensus Estimate for 2024 earnings is $3.30 per share, down 1.8% over the past 30 days, suggesting 24.53% growth from 2023 [5] - The consensus mark for 2024 revenues is $25.66 billion, indicating 13.16% growth from 2023 [5] Segment Performance - AMD expects strong sequential growth in Data Center, Client, and Gaming segments [3] - YoY, Data Center and Client segment revenues are expected to increase significantly, while Embedded and Gaming segment revenues are expected to decline [3] Semiconductor Industry Trends - Global semiconductor sales grew 23.2% YoY in Q3 2024, reaching $166 billion [6] - WSTS projects global semiconductor sales to reach $611.2 billion in 2024, a 16% increase from 2023 [8] - IDC expects more than 20% YoY growth in 2024 semiconductor sales, driven by AI chips and smartphone demand recovery [9] - WSTS expects global semiconductor sales to grow 12.5% in 2025, reaching $687.4 billion [9] Strategic Initiatives and Acquisitions - AMD's public cloud instances increased 20% YoY to over 950 in Q3 2024, with deployments by Microsoft, AWS, Uber, and Netflix [7] - Meta Platforms employs over 1.5 million EPYC CPUs globally [7] - AMD acquired Silo AI and ZT Systems for $4.9 billion to strengthen its AI ecosystem and data center AI footprint [10][11] - AMD expanded its footprint among energy, technology, and automotive companies, including Airbus, FedEx, HSBC, and Walgreens [12] - AMD launched new products like the Instinct MI325X accelerator, Ryzen AI 300 Series, and Ryzen 9000 Series processors [12] Valuation and Investment Outlook - AMD stock is overvalued with a forward 12-month Price/Sales of 7.34X compared to the sector's 6.01X [14] - AMD has a Zacks Rank 3 (Hold), suggesting it may be wise to wait for a more favorable entry point [14]