AMD Stock Just Fell Below the Price I Said I'd Pay for It.

On November 5, shares of Advanced Micro Devices (AMD) plummeted by approximately 17%, ending the day at $404.40. This decline came as chip stocks nationwide faced selling pressure due to election victories of politicians pledging to restrict artificial intelligence (AI) data centers, which sparked fears about the AI boom. The Philadelphia semiconductor index plummeted by 12.3%, marking its worst day since March 2020.

Earlier, on November 3, AMD's third-quarter earnings showed strong performance, with revenue increasing by 45% year-over-year to $13.4 billion and guidance predicting revenue growth of over 80% in 2027. Despite the recent stock sell-off, AMD's stock has risen by about 89% in 2026. CEO Lisa Su reassured investors that AMD's data center infrastructure plans, including land and power, are already in place, reducing concerns about political restrictions impacting upcoming quarters.

The company's adjusted earnings per share for the first nine months of 2026 stood at $5.12, with guidance for 2027 indicating an EPS of around $8. This implies a potential doubling of earnings from the current estimate, which stands at $16. Analysts project operating expenses for 2027 to grow at a rate significantly lower than revenue growth, potentially leading to a doubling of earnings.

Currently, AMD's stock trades at around 25 times the expected 2027 earnings, down from 30 times and 40 times in previous months, indicating a considerable discount to its intrinsic value. Given AMD's robust financial performance and the potential for further earnings growth, the author suggests purchasing the stock in increments, employing a form of dollar-cost averaging to mitigate the risks associated with further price declines.

Despite the volatility, the author concludes that AMD's outlook remains strong, and the stock is trading below the author's preferred purchase price of $480, making it an attractive opportunity to buy in stages.