AMD Shares Rise 33% in a Month: Buy, Sell or Hold the Stock?

Core Insights - Advanced Micro Devices (AMD) shares have surged 33.4% in the past month, significantly outperforming the Zacks Computer and Technology sector and its closest competitors, NVIDIA and Broadcom [1][7] - The strong performance is driven by robust demand for EPYC processors, particularly in cloud and enterprise workloads, as well as the growing adoption of AI technologies [2][6] Performance Overview - AMD's stock has outperformed NVIDIA, which increased by 3.1%, and Broadcom, which saw a decline of 10.8% year-to-date [1] - The broader technology sector has experienced a slight decline of 0.9% [1] Demand Drivers - The demand for EPYC processors is being fueled by the rise of AI use cases and the need for general-purpose compute infrastructure [2] - AMD's strategic investments in AI hardware and software, along with an expanding partner base, including a significant deal with OpenAI, enhance its market prospects [2] Market Expansion - Adoption of EPYC processors among major cloud hyperscalers is increasing, with over 100 new AMD-powered cloud instances launched in Q2 2025 [6] - AMD currently has 1,200 EPYC cloud instances available globally, with significant traction in various sectors including aerospace, streaming, and financial services [6][8] Revenue Guidance - AMD expects Q3 2025 revenues to be approximately $8.7 billion, indicating a 28% year-over-year growth [11] - The Zacks Consensus Estimate for Q3 2025 revenues is $8.71 billion, reflecting a 27.8% increase from the previous year [13] Competitive Landscape - AMD faces intense competition from NVIDIA and Broadcom, particularly in the AI and cloud data center markets [15][22] - NVIDIA's Data Center segment generated $41.1 billion in revenues in Q2 2026, marking a 56% year-over-year increase [16] Valuation Concerns - AMD's stock is currently considered overvalued, with a forward 12-month price/sales ratio of 9.15X compared to the sector's 6.73X [19] - The company's Value Score of D indicates a stretched valuation at this time [19] Conclusion - While AMD's expanding portfolio and partnerships are expected to drive top-line growth, near-term prospects are clouded by macroeconomic uncertainties and stiff competition, particularly from NVIDIA [22]