AMD stock price has moved into a technical bear market after falling by 20% from its highest point in October. It has dropped to $215, and has formed an island reversal pattern, pointing to a potential retreat despite the ongoing AI boom.
AMD business has continued thriving
Advanced Micro Devices, a top player in the semiconductor industry, has come under pressure in the past few months. This retreat happened as concerns about the AI bubble continued and as competition accelerated.
The most recent financial results showed that the company’s business continued doing well. Its results revealed that its revenue jumped to a record high of $9.2 billion, up by 36% from the third quarter of 2024.
Most of this revenue growth was driven by its data center business, which has accelerated in the past few months. It also benefited from the growth of its server and PC businesses.
AMD’s AI chips are widely seen as the best alternatives to the more advanced Nvidia semiconductors. Indeed, the company announced a large deal with OpenAI last year.
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This deal will see OpenAI deploy up to 6 gigawatts of AMD Instinct GPUs. AMD also gave OpenAI warrants of about 160 million shares. It will also see AMD make billions of dollars annually from OpenAI. IREN, a large collocation company, has also decided to use Nvidia and AMD GPUs in its data centers.
The results also showed that the company’s profitability continued growing. Its operating income rose from $0.7 billion in Q3’24 to $1.3 billion in Q3’25. The net income jumped by 61% to over $1.23 billion.
Wall Street analysts are highly optimistic that the company’s growth will continue in the coming years. The average estimate is that the company’s fourth-quarter revenue will come in at $9.65 billion, up by 26% from Q4’24.
This figure will bring the annual revenue to $34 billion, up by 32% from what it made in 2024. The analysts also see its yearly revenue growing by 31% on a year-on-year basis.
AMD’s valuation metrics are elevated
Wall Street analysts are hopeful that the AMD stock price has more upside to go in the near term. Data compiled by MarketBeat shows that the consensus target for the stock is $277, up by nearly 30% from the current level. A year ago, the target was $191, meaning that analysts have continued to boost their estimates.
Some top analysts have delivered a bullish forecast for the stock recently. For example, Cowen reiterated its buy rating, while Raymond James, Wells Fargo, Barclays, and Piper Sandler have boosted their estimates to overweight.
However, the main concern is that the company is severely overvalued. For example, AMD stock has a forward P/E ratio of 88.25, much higher than the sector median of 31.56. In contrast, Nvidia, which is growing at a faster pace, has a multiple of less than 50.
AMD stock price technical analysis
The daily chart shows that the AMD share price has been under pressure in the past few months. It has dropped from a high of $266 on October 29 to the current $214.
A closer look shows that the stock has formed an island reversal pattern, a common bearish sign. This pattern happens after an asset makes a big gap and then consolidates. It often leads to a big reversal.
The stock has moved to the 50-day Exponential Moving Average (EMA). Therefore, the most likely scenario is where it retreats and possibly hits the key support at $200. It may also drop further as it attempts to fill the up-gap.
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