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Written by Brett Schafer for The Motley Fool->
The company continues to see strong AI demand from data centers.
The stock's shares look very expensive today.
Shares of Advanced Micro Devices (NASDAQ: AMD) shot up 13.3% this week, according to data from S&P Global Market Intelligence. The semiconductor maker that plays Robin to Nvidia's Batman is heading back to all-time highs after reporting strong revenue from its data center segment in the first quarter.
Here's why the artificial intelligence (AI) beneficiary was up again this week, and whether now is the time to pile into the stock.
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Advanced Micro Devices (AMD) sells computer chips to data centers and personal computing devices. It has been a massive winner in the AI revolution, which continued in the first quarter. Overall revenue grew 38% to $10.25 billion, while data center sales rose 57% to $5.8 billion, driving the majority of the company's growth.
AMD has signed numerous deals with the hyperscaler AI companies, such as a partnership with Meta Platforms to deploy one gigawatt of supply in the second half of this year. As well, AMD said on its conference call that it has secured contracts across its supply chain, leading to expectations for 46% revenue growth in the second quarter and continued demand through the year.
AI has changed the game for AMD. But that does not mean you should pile into the stock at a market cap of $660 billion. The company trades at a price-to-sales ratio (P/S) of 18 and a price-to-earnings ratio (P/E) of 134. If the company is going to continue winning because of AI, a lot of these gains are already priced into the stock.
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Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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