Be Cautious With AMD at $420 and Consider Your Options

Alex Sirois

Tue, May 19, 2026 at 11:40 AM EDT 4 min read

Quick Read

• AMD (AMD) reported Q1 2026 revenue of $10.25B, up 37.85% year-over-year, with Data Center revenue hitting $5.78B at 57% growth and free cash flow tripling to $2.57B. Q2 guidance projects $11.2B in revenue with server CPU revenue expected to grow more than 70% year-over-year, while CEO Lisa Su raised the server CPU TAM forecast to over $120B by 2030 driven by agentic AI workloads.

• AMD is gaining share in the AI infrastructure buildout as hyperscalers commit to multi-year GPU and CPU deployments, with Meta’s 6-gigawatt MI450 deployment and OpenAI’s AI infrastructure ramp providing unusually visible order book visibility.

• The analyst who called NVIDIA in 2010 just named his top 10 stocks and AMD wasn't one of them. Get them here FREE.

Advanced Micro Devices (NASDAQ:AMD) at $420.99 screens as a compelling research setup. The stock pulled back 8.24% in the last week into a window where the AI infrastructure thesis is still gaining altitude. That dip toward the $410 to $415 zone marks a notable level, and the latest results reinforce the underlying setup.

AMD designs the CPUs and GPUs at the center of the AI buildout, with EPYC server processors competing against Intel and Instinct accelerators chasing NVIDIA. The stock has run hard, up 96.58% year to date and 259.3% over the past year, after blockbuster partnership announcements with OpenAI and Meta reset the demand picture.

Why AI Capex Keeps Pulling AMD Higher

The Q1 2026 report was the clearest inflection yet. Revenue hit $10.25 billion, up 37.85% year over year, with Data Center alone contributing $5.78 billion at 57% growth. Free cash flow more than tripled to $2.57 billion, and non-GAAP gross margin expanded 170 basis points to 55%.

The analyst who called NVIDIA in 2010 just named his top 10 stocks and AMD wasn't one of them. Get them here FREE.

Q2 guidance points to roughly $11.2 billion in revenue, up about 46% year over year, with server CPU revenue expected to "grow by more than 70% year-over-year in the second quarter." CEO Lisa Su raised the server CPU TAM forecast to "greater than 35% annually, reaching over $120 billion by 2030" on Agentic AI workloads and flagged a clear path to "more than $20 in EPS" long term. With 6 gigawatts of Meta deployment and the OpenAI MI450 ramp starting in H2, the order book is unusually visible.

Where the Valuation Argument Breaks Down

The cleanest bear case is price. AMD trades at a trailing P/E of 141, with price-to-sales at 18 and EV/EBITDA near 91. Any slip in AI capex or a competitive misstep against NVIDIA gets punished from this altitude. China export restrictions on MI308 GPUs remain unresolved, and Reddit chatter has flipped from bullish scores of 75 to 95 in mid-May to bearish readings of 24 to 36 as profit-taking takes hold.