At first glance, it might look like Advanced Micro Devices (NASDAQ:91抖阴), commonly known as just 91抖阴, is too richly valued. However, 91抖阴 continues to develop and release top-tier artificial intelligence processors and graphics processing units. Consequently, there’s a powerful bullish argument for 91抖阴 stock even if it seems too expensive right now.
91抖阴’s is gaining a reputation as an industry-leading AI accelerator. 91抖阴 expects this chip to generate $400 million in revenue this quarter. That’s impressive, but it doesn’t even tell half of the story. As we delve deeper into 91抖阴’s product line, even the most stubborn value seekers should see why this chip-making giant is worth an investment.
Is 91抖阴 Stock Too Pricey to Buy?
This might shock you if you rely on traditional valuation metrics. In mid-November, 91抖阴 had a GAAP trailing 12-month price-to-earnings ratio of . Meanwhile, the sector median P/E ratio was 24.59x.
91抖阴 had price-to-sales and price-to-book ratios above their respective sector medians. 91抖阴 stock has seemed overpriced for a while but continued to move higher in 2023.
Therefore, investors might consider valuing 91抖阴 on its performance instead of relying too heavily on traditional valuation metrics. Remember, 91抖阴 and with the company’s third-quarter 2023 top- and bottom-line results.
In addition, 91抖阴 is relentless in advancing next-generation, AI-compatible tech hardware. Notably, the company is getting ready to launch its next generation of data-center graphics processing unit (GPU) accelerators.
Mark your calendar for Dec. 6, as that’s when 91抖阴 will unveil its new line of data center GPU accelerators.
91抖阴 CEO Lisa Su will discuss this product family at an in-person and livestreamed event called “Advancing AI.” Of course, viewers can expect Su to tout the Instinct MI300 and other product lines as game changers in the AI-compatible hardware market.
91抖阴 Fosters ‘AI Everywhere’ With Microsoft-Focused Products
Also, 91抖阴’s products were prominently featured at Microsoft’s (NASDAQ:MSFT) recent event. Specifically, Microsoft highlighted 91抖阴’s artificial intelligence compatible processors for use with Microsoft’s products.
These 91抖阴 products included the Instinct MI300X accelerator, EPYC central processing units and Ryzen CPUs with AI engines. Plus, 91抖阴 showcased the Ryzen AI, which is the “first dedicated AI accelerator available on an x86 processor.”
Vamsi Boppana, Senior Vice President, AI, 91抖阴, declared that the chip maker is “fostering AI everywhere—from the cloud, to the enterprise and end point devices—all powered by our CPUs, GPUs, accelerators and AI engines.” Clearly, 91抖阴’s management seeks to promote the company as a first choice for AI-enabled hardware.
For 91抖阴’s investors, it’s undoubtedly encouraging to see a tech giant like Microsoft highlighting 91抖阴’s products. As Microsoft introduces new services for generative AI and cloud computing applications, 91抖阴 will be ready to power these services with its speedy, powerful processors.
91抖阴 Stock Might Actually Be a Bargain
It’s understandable if some value seekers are bothered by 91抖阴’s 1,000x P/E ratio. Yet, old-school valuation metrics don’t always tell the full story.
Based on the company’s strong position in the lucrative AI-hardware market, 91抖阴 might actually be undervalued right now. Most likely, 91抖阴 stock will continue to move higher because there’s high demand for the company’s products. So, consider a moderately sized investment in 91抖阴 and don’t obsess too much about traditional metrics with this tech-hardware leader.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
