Why Advanced Micro Devices Stock Just Bounced Back
Key Points
Goldman Sachs analyst James Schneider raised his price target on AMD stock to $640 this morning.
AMD stock boasts rapid earnings growth and free cash flow that already dwarfs reported earnings.
- 10 stocks we like better than Advanced Micro Devices ›
Advanced Micro Devices (NASDAQ: AMD) stock jumped 8.3% through 10 a.m. ET Monday, but the catalyst that sparked the move looks rather tenuous.
As StreetInsider.com reports today, Goldman Sachs analyst James Schneider raised his price target on AMD stock to $640 this morning, and that's really all the detail anyone has on the raise -- that it happened.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now, when you join Stock Advisor. See the stocks »
Image source: AMD.
Goldman still loves semiconductor stocks
AMD stock sold off hard at the end of last week, falling nearly 11% from Tuesday's all-time high to Thursday's close. Goldman hasn't lost faith in the semiconductor stock, however, instead taking advantage of last week's sell-off to quietly raise its price target on AMD. (Goldman had previously recommended buying AMD despite valuing it at only $450 -- a price much less than it's been trading at for weeks.)
Now, with AMD trading below $570 but Goldman saying it's worth $640, the "buy" rating makes more sense. And yet, in the absence of more detail about why Goldman thinks AMD stock is worth so much, investors need to consider carefully before following the advice of one analyst just baldly declaring the stock a "buy."
What's next for AMD investors?
I mean, consider the valuation. AMD stock trades for more than 170 times its trailing earnings today. Isn't that too much to pay?
Not necessarily. Next year's earnings are forecast to grow mightily, dropping AMD's forward P/E ratio down to just 74. What's more, S&P Global Market Intelligence data confirm that AMD is already making more money than its income statement currently reflects. Trailing free cash flow at the stock is $8.6 billion -- 72% more than reported net income.
With long-term earnings projected to grow 55% a year, AMD might be cheap enough to buy.
Should you buy stock in Advanced Micro Devices right now?
Before you buy stock in Advanced Micro Devices, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Advanced Micro Devices wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $418,761!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,195,804!*
Now, it’s worth noting Stock Advisor’s total average return is 918% — a market-crushing outperformance compared to 208% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of July 6, 2026.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices. The Motley Fool has a disclosure policy.
Recommended Articles
