‘Don’t Go Bargain Hunting,’ Says Top Investor About AMD Stock

Advanced Micro Devices (NASDAQ:AMD) finds itself in a race where the finish line feels impossibly distant, as Nvidia continues to dominate the AI data center arena with a seemingly untouchable lead.

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That being said, AMD has been delivering strong revenues in this lucrative and rapidly growing industry, carving out a respectable foothold as a secondary player.

However, the company’s disappointing Q4 guidance has weighed heavily on investor sentiment, contributing to a 22% decline in its share price over the past year.

Could AMD’s relatively low valuation and surging demand for AI chips position it as one of the big winners of 2025? Top investor, known by the pseudonym Nexus Research, believes this is wishful thinking.

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“AMD stock is not worth buying given its lagging position in the AI race,” asserts the investor who sits in the top 4% of TipRanks’ stock pros.

Nexus Research argue that AMD’s colossal gap with Nvidia is widening, especially when it comes to increasingly advanced operations. This growing disparity is particularly pronounced when it comes to the AI agents that larger tech companies are looking to adopt.

“AMD is yet to offer integrated hardware-software technology that is fit to run such complex workloads,” Nexus opined, adding that Nvidia “continues to widely outpace AMD in terms of offering industry-leading AI solutions.”

According to the investor, another major hurdle that AMD will be forced to reckon with is the “custom silicon” wave that megascalers are moving towards. Instead of going with the ready-made solutions offered by Nvidia and AMD, tech leaders including Amazon, Microsoft, and Google are partnering with Broadcom or Marvell Technologies to build “more tailored, integrated technology infrastructure in their data centers.”

Finally, Nexus throws cold water on the idea that AMD’s cheap valuation makes it a compelling buy. Though acknowledging that AMD has a cheaper Forward PEG than the other companies building the infrastructure of the AI revolution, the investor reminds readers that there are “important reasons as to why the market is discounting its valuation to such a degree.”

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To this end, Nexus Research urges investors to avoid “face the reality” about AMD’s prospects and accordingly assigns a Hold (i.e., Neutral) rating to its shares. (To watch Nexus Research’s track record, click here)

Meanwhile, Wall Street analysts appear more optimistic. With 20 Buy recommendations, 9 Holds, and a lone Sell, AMD boasts a Moderate Buy consensus rating. Even more enticing, its 12-month average price target of $178.39 implies ~50% upside over the next year. (See AMD stock forecast)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.