Parkev Tatevosian, CFA on $AMD (Nov 5, 2026)

AMD's management team stated, "We achieved a record quarter with revenues that exceeded the upper limit of our expectations." This revenue figure pleased investors, and was even higher than Wall Street had expected.

It is not surprising that AMD's stock rose by more than 7% following these impressive quarterly financial results So, investors are asking me: "Does AMD stock represent a buying opportunity after these impressive quarterly financial results?"

I wanted to answer this question here after evaluating the company's quarterly figures, considering the outlook, comparing it to their valuation, and determining whether it actually looks like a buying opportunity after these figures.

So, AMD said: "We achieved a record quarter with revenues that exceeded the upper limit of our expectations." Demand for our Instinct and Epic products continued to strengthen, and we expect growth to accelerate further in the fourth quarter as we expand our production of Helios and Venice.

We are confident in our ability to maintain very strong revenue growth and expand profitability over the coming years. For years, not just for the next quarter or the next few quarters, but for years. Many years of growth.

I can verify this management team statement by what I hear from all the other companies that AMD serves, including Meta Platforms, Alphabet, Microsoft, and Amazon.

A large proportion of these budget allocations goes towards the components that go into data centers. AMD is one of those components that go into those data centers. Or should I say, AMD provides some of those components that go into those data centers.

As a result of those huge capital expenditure budgets, AMD benefits from the large cloud computing companies.

Overall, revenues rose 45% to $13.4 billion, up from $9.2 billion in the same quarter last year. In addition, the gross profit margin increased to 54%, up from 52%.

Currently, AMD's profit margins are not increasing as rapidly as those of Nvidia or even Micron. These two companies achieve gross profit margins exceeding 75% and 80%, and operating profit margins exceeding 60% and 80%, but AMD is also working to improve its margins.

Operating margin improved by 50% from 14% to 21%, with operating income jumping by 123% to $2.8 billion. AMD's stock rose 7.7% to trade at $521 per share at the time this video was recorded.

So, if you recall, I posted a video in which I answered the question: "Is AMD stock a buying opportunity?" This was before they delivered this massive update to investors.

You might look at these results and say, "Well, Barkev, you were wrong." AMD's stock rose by nearly 8 % following these earnings results. They exceeded expectations. I was wrong when I said it wasn't a buying opportunity.

Because that was my conclusion at the time. I said that AMD stock seems overvalued. The chances of a decline appeared greater than the chances of an increase.

One viewer commented on this by saying, "This analysis held up well," along with a laughing emoji. And you know, that's true. AMD has exceeded expectations and the stock price is rising.

But my response to that comment was, as you know, I'll remind everyone that when I recorded that video about AMD, the stock was trading at $500.28 per share. You can watch that video and see the price on the screen at the time of recording.

Today, even after the rise, the stock is trading at $520.71 per share. In other words, AMD's stock is still down about $11 since that video was recorded. So, it is still low.

In my opinion, it was the right thing to do to avoid buying AMD stock before the announcement of those earnings results. You can now buy AMD stock at a lower price and with much less risk.

And that was my main point in that video, that AMD had far greater downside risks than upside possibilities, especially when looking at the risk-reward ratio.

AMD expects fourth-quarter revenue of around $17 billion, which at the midpoint represents a 66% year-over-year growth, with gross profit margins of around 55%. So, the gross profit margin will be a slight increase from the 54% in the current quarter, but the revenue figure is undoubtedly impressive, accelerating from 45% growth to 66% growth, and increasing from $13.4 billion to $16 billion on a quarterly basis.

I believe this will continue for AMD for several years, just as the management team has stated. I have no doubt about the company's growth prospects. What I had doubts about before the quarterly earnings were released was the financial valuation of the stock.

Much of that optimistic outlook was already built into AMD's stock price given its significant rise in 2026.

To be more precise, AMD's stock is still up 126%, and I'm generally pleased with that because I rated it earlier this year as a buy opportunity. In fact, last year, 2024, I ranked AMD stock as one of the best stocks to buy.

I predicted the company's success and informed investors that it was an excellent buying opportunity before the stock price rose so dramatically.

After the price rose significantly, I said that the situation at these levels indicated a greater likelihood of a decline than an increase. So, I've been bullish on AMD stock for several years.

I only lowered its rating to "hold" a few months ago when the stock price rose significantly.

It is now trading at a forward P/E ratio of 30, which is much better than it was two weeks ago when it was trading at a forward P/E ratio above 40. So, I have not yet incorporated these recent results into my discounted cash flow assessment.

Here is my immediate reaction to the earnings results without having had time to review the company's conference call transcripts yet. I will wait to review the transcripts of that conference before updating my assessment of the company's discounted cash flows, but I am relatively confident that when I review those results and take a comprehensive look at the company's quarter, I will likely raise my estimates of the free cash flow I expect this company to generate over the next few years.

The numbers were much better than initially expected, and I think that when I delve into the details, the situation will be much better than I anticipated a few weeks ago.

Based on the current situation, I calculate the fair value of the company at $394, while the current market price at the time of recording this video is $518 per share. The stock has risen by more than 6.9%.

It has been fluctuating around these levels for approximately 30 to 45 minutes since the earnings were released. However, given the significant difference between my fair value and the current market price, I do not expect those upward adjustments to be sufficient to justify upgrading AMD's stock rating to "buy".

Therefore, for now, I will maintain the stock's rating at "Hold" and will provide further analysis when I delve deeper into the company's quarterly financial results.