AMD has tripled in a year to $646, about 59 times my 2027 profit estimate. I expect strong growth but a lower multiple, so the stock lands near $516 in twelve months, with a wide range.
Key points
- 59 times 2027 earnings of $10.91 a share (my estimate) is what the $646 price costs today.
- $515.58 is my 12-month target, 20% below the price.
- $11.54 billion June-quarter revenue grew 50%; September guidance is $13.0 billion.
The call
The price demands that AMD's AI plans arrive almost whole. At 30 times earnings, a fair multiple for a fast grower, the price needs about $21.50 a share of 2028 earnings. That is roughly $37 billion of profit.
I expect strong delivery but not that much. Data Center sales double in 2027 and revenue reaches $92 billion in 2028, my estimate. AI chips earn lower margins than the company average, and share count rises with warrants, acquisitions and stock pay. Multiples shrink as growth slows.
12-month value by scenario ($ per share)Analyst arithmetic on 2028 EPS; price $645.90 on Oct 7, 2026
Valuation
| Item | Figure |
|---|
| 2028 revenue (my estimate) | $92 billion |
| Operating margin, adjusted | 33% |
| 2028 earnings a share | $15.46 |
| Earnings, 12 months to Oct 2027 | $14.32 |
| Multiple | 36 times |
| Target | $515.58 a share |
Thirty-six times is generous for a company growing 40% or more, yet below today's 59. The bull case (2028 revenue $115 billion, 40 times) gives $842, up 30%. The bear case (revenue $70 billion, 25 times) gives $250, down 61%. The base is weighted toward the downside, so I rate it a sell.
Risks
- AI demand and customer deals (Anthropic, OpenAI, Meta) ramp faster than I assume; watch the November 3 results and 2027 guidance.
- Rates are rising: the 10-year yield is 5.27% and the Fed hiked in September. A fall in yields would lift the multiple.
- Supply expansion and the Helios rack launch could beat my margin estimate; watch gross margin against the 56% guide.
What would change my mind
Evidence that 2027 Data Center revenue is tracking above $45 billion with gross margin above 56% would move me toward a hold.