AMD: Strong AI Tailwind Fails To Boost Overall Revenue Growth


  • Despite 80% YoY increase in Data Center revenue, driven by strong demand for AI computes, the total revenue only grew 2.2% YoY in 1Q FY2024.
  • Management expects a slower recovery in the Embedded and Gaming segments in FY2024 following nearly a 50% YoY revenue decline in Q1 FY2024, which continues to impact its revenue growth.
  • A tailwind of gross margin expansion was largely offset by strong growth in SG&A expenses, resulting in a muted EBIT margin outlook.
  • Despite anticipated earnings rebound in FY2024, AMD’s non-GAAP P/E fwd remains high at 46.8x, comparable to NVIDIA’s 47.3x, and it also sits 38% above the SOXX index.
  • AMD stock appears overvalued, as supported by the increase in its valuation multiple alongside downward revisions in revenue and EPS in FY2024 and muted consensus in FY2025.

Investment Thesis

Advanced Micro Devices’ (NASDAQ:AMD) stock has rallied 24% since the beginning of this year. Despite strong growth in AMD’s Data Center, the company’s overall revenue growth has been muted, largely driven by a significant decline in its Gaming and