AMD stock is overvalued relative to intrinsic value; downgrade to hold due to price exceeding fair value estimate.

On September 3rd, I upgraded AMD stock to a "buy" rating. Since then, the price has risen by more than 37%. It was one of my best promotions this year. But today , I am downgrading AMD's stock rating to "hold".

Regarding AMD, I updated here on September 3, 2026 with a " Buy" rating. Last month, AMD's stock rose by more than 37%. It is now trading at over $655 per share.

When I upgraded the stock, it was priced at around 500 or less than 500.

Since the beginning of the year, AMD stock has risen by more than 205%, and I correctly predicted most of this move . When the stock price rose above $500, I downgraded its rating and informed investors that the rise had been too rapid and that the fundamentals did not justify the valuation at that time.

Therefore, I kept it classified as a "hold" opportunity until the stock price dropped in September to near the $455 level, which is when I upgraded it. In fact, on September 3, it was trading at around $452 when I upgraded AMD stock to " buy".

Prior to that, earlier in the year when the stock price collapsed to around $180 or should I say, sorry , $190, I upgraded it and reaffirmed that it was a strong buying opportunity.

Therefore, AMD stock has traded much more accurately than my valuation estimates. When I felt that AMD stock was undervalued, I made a video and upgraded it to a buy opportunity, and the stock price reacted positively and moved upwards.

When I felt that the stock price was too high, I made a video and lowered its rating to " hold," after which the stock's performance declined and its price dropped. So, he moved in line with my assessment of him accurately, which doesn't always happen, does it?

I am not here to say that I always do this , or that I am always right in these assessments, that the market agrees with my estimates, and that stock prices move accordingly . In fact, the opposite is true.

This rarely happens, and that is why I am keen to highlight this particular situation because it moved very closely, in my estimation.

The stock price usually takes longer to react to my point of view when I believe the situation is undervalued . Sometimes the situation gets worse for me, as I believe the stock is undervalued, but it continues to fall.

Therefore, this was a very unique situation with AMD , where my upgrades or downgrades to the rating were mirrored by the movement of the stock price. It was extremely accurate.

So, given the accuracy of the estimates related to AMD, what do I see today that would lead me to lower the stock rating, as I mentioned in the introduction? Well, the market price is now much higher than my estimate of the intrinsic value of the stock.

I calculated a fair value of $419 for AMD stock, while the current market price exceeds $655. Therefore, the overvaluation compared to my intrinsic value—which is the baseline figure I look at when adjusting the rating of AMD stock—now supports a downgrade.

That's why I mentioned in the video introduction that today I'm going to downgrade AMD's stock rating to "hold" instead of " buy opportunity". Of course, there has been a lot of positive news about AMD, and I can understand the momentum surrounding the stock.

The headlines with one of its biggest customers, Meta, the proliferation of proxy AI, and AMD's strong position in that market opportunity all reflect excellent prospects for the company , and I agree.

I have very strong growth expectations for this company. In fact, I estimate that its free cash flow will grow from $7.5 billion this year to $44 billion by 2030. That's nearly a sixfold increase in free cash flow over the next four years, which is what I expect for AMD with continued growth beyond that.

Therefore, I am optimistic about the company's prospects, but the valuation has been premature. This has happened before with AMD, given that it is one of the most popular companies, and one that attracts a lot of investor attention, and investor sentiment is very positive.

So, as I mentioned, I am downgrading the stock rating here. I updated that in my spreadsheet on October 6, 2026, lowering the classification to "Retain".

My confidence in my estimates regarding AMD is increasing due to the recent accuracy in my predictions. As you can see here, I have varying degrees of confidence. I'm not always sure.

I try not to overestimate my abilities, and I have a confidence rating that ranges from low to medium to high.

My confidence in my valuations of AMD was previously low, but given recent performance, I've raised that valuation to a moderate level of confidence that this doesn't look like a good buying opportunity at these prices.