Is The Growth Baked Into Advanced Micro Devices Stock Believable?

The sticker shock on AMD shares fades when you look a few years out, but the real question is whether the company can deliver the growth that makes today's price a bargain.

At a glance, Advanced Micro Devices (AMD) stock looks expensive. Trading at about 71.3 times this year's expected earnings, it's the kind of price tag that makes many investors stop looking. But that's the wrong way to value a company where the story is all about future growth.

If you hold the stock at today's price of $532.57, the multiple you are paying falls on its own as earnings are expected to grow. By 2028, that same price works out to just 29.6 times the earnings analysts expect that year. That's a 58% lower multiple, a steep discount that accrues simply by the business growing into its valuation. A patient holder is effectively buying the third year's earnings at that much lower price.

But this forward valuation discount is not a guarantee; it's a forecast. And it only materializes if an aggressive growth ramp actually lands. The honest question is not the price, but whether the growth is credible.

To get that discount, Wall Street consensus assumes AMD's revenue will grow about 42.7% a year. That's

Fuente original: Yahoo Finance (https://finance.yahoo.com/markets/stocks/articles/growth-baked-advanced-micro-devices-184132837.html)