Opinion: AMD's valuation poses bigger risk than AI chip slowdown
Advanced Micro Devices (NASDAQ: AMD) has seen its shares fall amid an AI chip shortage that has benefited the company while Nvidia (NASDAQ: NVDA) struggles to meet demand. The piece argues that the primary threat to AMD investors is the stock’s lofty valuation, not a potential AI bust. AMD’s price‑to‑earnings (P/E) ratio sits at 139 and its forward P/E at 72, several times higher than Nvidia,…
Key points
- AMD's current P/E ratio is 139 and forward P/E 72, far above Nvidia and peers.
- Data‑center chips account for 58% of AMD revenue versus Nvidia's roughly 93% share.
- A valuation drop to Nvidia's level could erase about 80% of AMD's market value.
The author notes that AMD’s data‑center segment, which designs AI chips, contributed 58% of revenue in the latest quarter, compared with Nvidia’s near‑93% data‑center share, giving AMD more diversification across gaming, client and embedded markets. AMD’s AI accelerators also tend to be priced lower than Nvidia’s, which may keep budget‑conscious customers loyal. While the analyst reduced his AMD position because of valuation concerns, he remains a long‑term holder, believing chip demand will grow over time.
This Is AMD's Biggest Hurdle in an AI Sell-Off (and No, It's Not Nvidia)
aol.com · 18 October 2026
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