AMD stocks at all-time high, market cap crosses $300bn mark, trading at higher multiple than NVIDIA

Shares of Advanced Micro Devices or AMD, as it is popularly known soared on Thursday, extending their surge to reach yet another record high for the year.

The stock jumped 9.1 per cent, propelling the company’s market capitalization above $300 billion for the first time ever. This remarkable increase comes as shares have more than doubled since hitting a low point in October.

AMD is widely viewed as a key player in the AI sector, second only to NVIDIA. The recent optimism surrounding its new AI processors has helped the stock recover from a previously weak forecast.

Citigroup Inc. expressed strong bullish sentiment towards semiconductor stocks, especially as the AI market continues to expand, with various businesses and organizations investing in AI chips. AMD was singled out as one of the favoured stocks by Citigroup, alongside NVIDIA and Broadcom Inc.

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However, despite its impressive performance, AMD’s stock is trading at a high multiple of nearly 50 times its estimated earnings, making it significantly more expensive than industry leader NVIDIA, which has a comparatively milder multiple of 32 times.

While analysts generally hold positive views on AMD, with more than three-fourths of them recommending buying the stock, the current share price is essentially in line with the average price target, indicating that further upside may be limited.

The Nasdaq index, which is home to many tech companies, also reached a new high on Thursday, driven by optimism surrounding artificial intelligence. Investors anticipate AI to fuel a new wave of growth, leading to increased interest in companies positioned to benefit from this trend, such as chipmaker NVIDIA.

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The broader market sentiment is optimistic, with hopes that the US central bank will soon start lowering its key interest rate, making borrowing cheaper and stimulating economic activity. This optimism is reflected in the recent gains across major indices, including the Dow Jones and the S&P 500, which both closed at new highs.

Overall, the market’s enthusiasm for AI-related companies like NVIDIA and AMD, coupled with positive economic indicators, has contributed to the recent rally in tech stocks and broader market indices.