AMD: A Great Company, Finally a Fairly Priced Stock
Summary
I downgrading AMD from a STRONG BUY to a HOLD. The Q2 evidence supports the product thesis, but only 0.4% upside from the $549.88 intraday price leaves too little margin of safety before the MI450 and Helios ramp is proven. AMD reported Q2 2026 revenue of $11.536 Bn, up 50% y/y, and Non-GAAP EPS of $1.66. Revenue beat the $11.31 Bn consensus by about 2%, while EPS beat the $1.61 consensus by 3%.
The operating thesis strengthened. Data Center revenue rose 107% y/y to $6.718 Bn, EPYC sales grew more than 70%, Instinct sales more than doubled, and Embedded returned to 19% growth.
My 2027 base case is $88.8 Bn of revenue and $15.50 of Non-GAAP EPS. A 40x multiple produces a $620 future value and a $552 present target after a 10% discount rate.
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