AMD Shares Slide Despite Strong Growth. Is It Time to Buy the Stock on the Dip?

Advanced Micro Devices (NASDAQ: AMD) posted beardown gross maturation to adjacent retired 2025 and issued coagulated 2026 guidance, but the banal fell arsenic investors were expecting much aft the banal had doubled implicit the past twelvemonth heading into the fourth-quarter report's release. Meanwhile, investors decided not to springiness the institution recognition for an unexpected boost successful China gross that it saw successful Q4, which whitethorn not repeat.

Sales of $390 cardinal worthy of graphics processing units (GPUs) to China helped boost AMD's Q4 results. However, the institution didn't forecast further income to the country, extracurricular of $100 cardinal successful gross successful Q1, with absorption calling the concern "dynamic."

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This helped AMD's information halfway gross ascent 39% twelvemonth implicit twelvemonth successful the 4th to $5.4 billion. Growth was led by some grounds cardinal processing units (CPUs) income and accelerating GPU deployments. It said that 8 of the 10 largest artificial quality (AI) companies are present utilizing its GPUs for their AI workloads.

Client and gaming segment, revenue, meanwhile, jumped 37% to $3.9 billion. Within the segment, lawsuit gross roseate 34% to $3.1 cardinal arsenic it continues to instrumentality marketplace stock successful the PC space, portion gaming gross surged 50% to $843 million. However, the institution does expect the semi-custom gross that helped powerfulness its 2025 gaming conception results to autumn meaningfully successful 2026. AMD's smaller embedded segment, meanwhile, saw gross borderline up 3% to $950 million. The institution expects the conception to turn successful 2026.

Overall, AMD's Q4 gross climbed by 34% twelvemonth implicit twelvemonth to $10.27 billion. Gross borderline came successful astatine 54%, up 300 ground points from a twelvemonth ago, helped by the reversal of a write-down connected its MI308 chips for China. Adjusted net per stock roseate 40% to $1.53, up of the $1.32 consensus.

Looking ahead, AMD guided for Q1 gross to turn by 32% twelvemonth implicit twelvemonth to $9.8 billion, positive oregon minus $300 million.

While AMD was a unfortunate of precocious expectations, the institution inactive performed good and appears connected way for a beardown 2026, particularly with it expected to commencement delivering GPUs to OpenAI successful the 2nd fractional of the year. Meanwhile, it remains the ascendant information halfway CPU provider.

Looking astatine valuation, AMD banal trades astatine a guardant price-to-earnings (P/E) ratio of 32 times 2026 expert estimates, but it has a guardant price/earnings-to-growth (PEG) ratio of lone 0.2 (with nether 1 times being considered undervalued). That makes this a banal worthy grabbing connected this terms dip, fixed its coagulated semipermanent outlook arsenic AI infrastructure spending continues to ramp up.