How AMD Stock Can Crash

Advanced Micro Devices (AMD) has faced challenges in the past. Its stock has experienced declines of more than 30% within less than 2 months on 14 occasions across multiple years, erasing billions in market value, and wiping out substantial gains in a single correction. If historical trends are any indication, Advanced Micro Devices (AMD) stock is not protected from abrupt and significant downturns.

The Risk That Is Brewing

• NVIDIA AI Dominance: NVIDIA is estimated to hold 80-90% of the market share in AI compute chips through 2025. Although AMD’s MI350 series is set to ramp up in Q3 2025, NVIDIA’s early mover advantage and software ecosystem continue to be formidable.
• ARM in Servers/PCs: ARM-based servers are expected to represent 21.1% of global shipments by 2025. Qualcomm Snapdragon X chips have already secured 10% of the high-end Windows PC market in Q1 2025, aiming for 50% market share within the next 5 years.
• Intel’s Client CPU Hold: Intel claims approximately 75.7% overall market share in client CPUs (average for Q1/Q2 2025) and an impressive 79.7% in mobile CPUs, despite AMD’s increase in desktop share to 32.2% by Q2 2025.

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Is Risk Showing Up In Financials Yet?

Assessing the fundamentals can certainly help alleviate risks. For more insights on AMD, read Buy or Sell AMD Stock. Below are some key figures that are significant.

• Revenue Growth: 27.2% LTM and an average of 11.7% over the last 3 years.
• Cash Generation: Nearly 13.7% free cash flow margin and 8.3% operating margin LTM.
• Valuation: Advanced Micro Devices stock is valued at a P/E ratio of 147.8.
• Opportunity vs S&P: In comparison to the S&P, it offers a higher valuation, greater revenue growth, and lower margins.

How Bad Can It Really Get?

When evaluating AMD’s risks in challenging markets, the data tells a compelling story. The stock fell by over 83% during the Dot-Com crash and nearly 92% during the Global Financial Crisis. The inflation spike in 2022 also significantly impacted it, resulting in a decline of approximately 65%. Smaller downturns like those in 2018 and during COVID-19 also triggered drops of around 49% and 34%, respectively. Thus, despite the positive factors surrounding AMD, major market selloffs have had a dramatic impact.

However, the risk is not confined to significant market crashes. Stocks can decline even in favorable market conditions – consider events like earnings announcements, business updates, and changes in outlook. Read AMD Dip Buyer Analyses to understand how the stock has bounced back from steep declines in the past.

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