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Shares of Advanced Micro Devices, or AMD, as it is popularly known, soared on Thursday, extending their surge to another record high for the year.
The stock jumped 9.1 percent, propelling the company’s market capitalization above $300 billion for the first time. This remarkable increase comes as shares have more than doubled since hitting a low point in October.
AMD is widely viewed as a critical player in the AI sector, second only to NVIDIA. The recent optimism surrounding its new AI processors has helped the stock recover from a weak forecast.
Citigroup Inc. expressed strong bullish sentiment towards semiconductor stocks, significantly as the AI market expands, with various businesses and organizations investing in AI chips. AMD was singled out as one of the favored stocks by Citigroup, alongside NVIDIA and Broadcom Inc.
However, despite its impressive performance, AMD’s stock is trading at a high multiple of nearly 50 times its estimated earnings, making it significantly more expensive than industry leader NVIDIA, which has a comparatively milder multiple of 32 times.
While analysts generally hold positive views on AMD, with more than three-fourths recommending buying the stock, the current share price is essentially in line with the average price target, indicating that further upside may be limited.
The Nasdaq index, home to many tech companies, also reached a new high on Thursday, driven by artificial intelligence optimism. Investors anticipate AI to fuel a new wave of growth, leading to increased interest in companies positioned to benefit from this trend, such as chipmaker NVIDIA.
The broader market sentiment is optimistic, hoping the US central bank will soon start lowering its key interest rate, making borrowing cheaper and stimulating economic activity. This optimism is reflected in the recent gains across significant indices, including the Dow Jones and the S&P 500, which closed at new highs.
Overall, the market’s enthusiasm for AI-related companies like NVIDIA and AMD, coupled with positive economic indicators, has contributed to the recent rally in tech stocks and broader market indices.
