Account Update: AMD's Breakthrough and Investment Strategy
Today's account is "very green," primarily due to a significant surge in the value of AMD stock. After a long period of stagnation, AMD finally experienced a breakthrough, leading to substantial gains.
AMD's Performance and Account Growth
My account increased by over $3,200, thanks to AMD's nearly 9% rise. The total assets in the account now exceed $234,000. I also added two shares of Lulu at a price of over $238 last Friday, following a pre-determined plan to incrementally increase holdings below $241. Currently, I hold 38 shares of Lulu.
AMD: From "Advanced Money Destroyer" to Opportunity
I've been building a position in AMD for nearly half a year. The stock was previously nicknamed "Advanced Money Destroyer" because it remained stagnant for a long time. Many investors became frustrated and sold their shares. However, some, including myself, held on, hoping for a turnaround. Now, with AMD's recent performance, many are wondering if it's still a good investment.
Analyzing AMD's Recent Surge
AMD's surge is attributed to the positive reception of its 2025 AI conference held last Friday.
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Wall Street's Reaction: Wall Street analysts have since revised their ratings for AMD.
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Piper Sandler raised its target price from $125 to $140, maintaining an "overweight" rating.
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Evercore ISI and Benchmark also raised their target prices.
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AI Conference Highlights: The newly released Helios server chassis and MI350 series AI GPU were well-received. These chips are reportedly faster than previous models and competitive with Nvidia in reasoning tasks.
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Market Growth Projections: AMD's CEO, Suma, stated that the AI market is expected to exceed $500 billion in the next three years. AMD is positioning itself as a strong competitor, emphasizing collaborations with companies like OpenAI, Meta Platforms, Oracle, and Microsoft.
Can You Still Buy AMD?
The key question is whether AMD is still a worthwhile investment.
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Valuation: AMD's forward PE of 29.15 is considered reasonable. Its PEG ratio is 0.59, which is relatively low, and its price-to-sales ratio is 6.84.
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Comparison with Competitors: Compared to Nvidia and BoTong (Broadcom), AMD's current stock price is relatively cheaper.
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Financial Performance and Growth: AMD's revenue has grown by double digits in recent seasons, and net profit growth has often exceeded threefold. Analysts expect revenue growth of 22.95% in fiscal year 2025 and 17.76% in fiscal year 2026.
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Profitability: While AMD's profitability is good, it is not as strong as Nvidia and Broadcom.
Investment Strategy for AMD
AMD's current price can still be considered for investment. However, it should not be the largest holding in your portfolio. Nvidia should ideally be the primary holding, with AMD as a secondary position. If you are not comfortable with AMD, Nvidia or Broadcom are alternatives.
When establishing a position in AMD, consider doing so gradually, not allocating a significant portion of your portfolio all at once. I currently hold 120 AMD stocks, which is the fourth largest position in my portfolio and my target allocation.
Additional Considerations
My average cost price for AMD is nearly $128. Consider buying AMD at the current price and then adding more shares in the $115 to $104 range.
Technically, AMD's recent trend is positive. It has experienced a significant increase in volume and a nearly 9% rise today. The stock faces resistance around $130, representing the annual line. If AMD breaks through this level, the next target could be $150.
Closing Remarks
I believe 2025 will be a breakthrough year for AMD. I plan to continue holding my shares and remain confident in its potential. If the stock breaks through the 250 military lines and annual lines, it could reach $150.
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