Is It Time to Turn Bullish on AMD Stock?

Core Viewpoint - Advanced Micro Devices (AMD) is showing signs of recovery with accelerating revenue growth, despite trading over 55% below its peak in March 2024 [1] Financial Performance - AMD reported Q1 2025 revenue of $7.4 billion, a 36% increase year-over-year, up from 24% growth in Q4 2024 and 14% for the entire year of 2024 [3] - The company achieved a net income of $709 million in Q1 2025, significantly higher than the $123 million from the same quarter last year [4] Segment Analysis - Two segments, which account for 80% of AMD's sales, showed strong demand for AI accelerators and CPUs, compensating for declines in other areas [4] - The data center segment, responsible for about half of AMD's revenue, experienced a growth slowdown to 57% annually from 69% in the previous quarter [7][8] - The embedded segment saw a slight annual decline of 3%, improving from a 13% drop in Q4, while gaming revenue decreased by 30%, an improvement from a 58% decline in the previous quarter [9][10] Revenue Composition - The client business, which includes PC chips, contributed 31% to overall revenue with a 68% annual growth, up from 58% in the prior quarter [10] - Overall, the embedded and gaming segments accounted for 20% of AMD's revenue, down from 32% a year ago, indicating a significant impact from downturns in these areas [10] Market Position and Valuation - Despite a stock price decline of over 30% from a year ago, AMD's forward price-to-earnings (P/E) ratio is 26, suggesting it may be undervalued [5][13] - The mixed financial results present both opportunities and challenges, with potential for investors to find value in the stock [11][12]