Investing.com — Lynx Equity Strategies issued a cautious note on AMD (NASDAQ:AMD) ahead of its earnings release, warning that the stock\u2019s sharp rally may be outpacing the company\u2019s fundamentals.<\/p>\n
\u201cAMD\u2019s ~80% rise over 3 months has several assumptions built into it,\u201d wrote KC Rajkumar of Lynx Equity Strategies.<\/p>\n<\/p>\n
Chief among them is said to be the belief that AMD\u2019s MI350\/MI355 and upcoming MI400X GPUs have secured broad adoption from hyperscalers like Meta (NASDAQ:META) and potentially AWS.<\/p>\n
But according to Rajkumar, \u201cwe doubt if AMD has bagged share at AWS\u2026 Without AWS, AMD may be dependent on one key backer \u2013 META.\u201d<\/p>\n
While some analysts are forecasting over 30% revenue growth in calendar 2025, Lynx warned that \u201cinvestors are yet to see tangible signs of MI350\/MI355 adoption at hyperscale data centers this year.\u201d<\/p>\n
The firm stated that expectations AMD will grow earnings per share to $7.50\u2013$8.00 by 2027 and justify $200 price targets are based on \u201chype built into Street expectations.\u201d<\/p>\n
Lynx also questioned the significance of AMD resuming shipments of its MI308 chip to China, noting that China\u2019s internet regulator may apply the same import restrictions to AMD as it has to Nvidia (NASDAQ:NVDA).<\/p>\n
The firm\u2019s valuation analysis implies downside risk. \u201cBased on 25x multiple over Cy26 consensus EPS of ~$6, we think the stock is likely to test the $150 price level,\u201d the note said.<\/p>\n
Rajkumar concluded: \u201cWe think the stock has discounted multiple years of strong revenue growth and may have run ahead of itself.\u201d<\/p>\n
Related articles<\/p>\n
Tech analyst warns AMD stock has run ahead of itself as company prepares to report<\/a><\/p>\n These Under-the-Radar Stocks Offer Better Risk-Reward Ratio Than Nvidia<\/a><\/p>\n