AMD Stock Just Hit New All-Time Highs. Should You Buy Shares Here?

While chipmaker Advanced Micro Devices (AMD) hit new all-time highs on April 20, its valuation remains attractive, given its powerful growth and huge opportunities in the AI-chip space. Additionally, in the longer term, the tech giant looks well-positioned to become a major player in the physical-AI space, while two banks recently issued bullish notes on AMD stock.

Because of these points, should investors looking to expand their exposure to large chip stocks consider buying AMD's shares now?

About AMD Stock

Based in Santa Clara, California, Advanced Micro Devices develops semiconductors used in computers, data centers, and gaming. Its GPUs are increasingly being utilized to help develop AI as well.

In fiscal Q4, AMD's non-GAAP net income jumped 42% to $2.5 billion, compared with $1.78 billion in the same period a year earlier. Revenue advanced 34% year-over-year (YOY) to $10.27 billion.

Changing hands with a forward price-to-earnings (P/E) ratio of 47.79 times, AMD has a market capitalization of $463.82 billion.

AMD's Valuation Remains Favorable Given Its Strong Growth, Positive Catalysts

The agentic-AI boom is increasing the demand for AMD's CPUs considerably among data centers, while it appears that AMD is starting to become a major player when it comes to providing low-cost GPUs. Indeed, the chipmaker's made major deals to provide GPUs to Oracle (ORCL), OpenAI, , and Meta (META), all since last October. In fact, the company's CEO Lisa Su predicted that its AI data center business would expand at an annual rate of about 80% in ‘the next three to five years.’  

Further, analysts on average expect the company's earnings per share to soar 76.76% this year and 59.17% in 2027.

Finally, the company's impressive fiscal Q4 results show that the chipmaker's powerful, positive catalysts are already enabling it to deliver strong earnings.

Considering all of these upbeat attributes, AMD's forward price-earnings ratio of 47.79 times is on the low side.

AMD Looks Poised to Become a Major Player in Physical AI

In January, Su said that physical AI, including autonomous vehicles and humanoid robots, could be “the next big thing.” With several large tech companies, including Tesla (TSLA), Alphabet (GOOG) (GOOGL), Uber (UBER), and Chinese tech giant Baidu (BIDU), pursuing initiatives in at least one of these areas, and autonomous vehicles starting to enter many major cities, Su seems to be on the right track. And with AMD having launched new products for physical AI in January and in light of the company's collaboration with multiple partners in the space, physical AI could easily become a huge, positive catalyst for AMD stock in the long term.

Two Banks Are Bullish on AMD Stock

Investment bank Stifel on April 20 hiked its price target on AMD to $320 from $280, citing higher-than-expected demand for its chips. Stifel kept a “Buy” rating on the name. Similarly, Bank of America last week raised its target on AMD stock to $310 from $280. According to the bank, “each gigawatt of installed AI capacity could add $15 to $20 billion in net revenue for AMD.”