After Nvidia’s $427B wipeout, is AMD’s 117x P/E rally a trap? Harry Jones Fri, November 13, 2026 at 7:42 AM EST 5 min read NVDA +1.40% AMD -2.64% LRCX -0.72% TTMI -0.58% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
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Investing.com — Chip stocks have spent the past month in retreat, with Lam Research (NASDAQ:LRCX) down 26.1% and TTM Technologies (NASDAQ:TTMI) down 35.0%. NVIDIA (NASDAQ:NVDA) then erased about $427 billion in market value over two sessions as its board turned on CEO Jensen Huang, ending in his abrupt resignation. Yet Advanced Micro Devices (NASDAQ:AMD)—the chip designer selling both server CPUs and AI accelerators to the largest cloud buyers—climbed 13.1% over the past week to $552.90, cutting its one-month loss to 9.1%.
The rally prices AMD as the automatic heir to NVIDIA's customers, but the stock already carried a premium valuation before the boardroom crisis began. Traders are piling in on AMD, yet the move has stretched the shares to 117.4 times trailing earnings, and InvestingPro's Fair Value now sits 23.9% below the share price.
Spotting when a rival's crisis pushes a stock past its fundamental ceiling is what ProPicks AI is built for. In Tech Titans, InvestingPro's strategy dedicated to high-margin tech leaders, AMD was left out of the November lineup in favor of companies capturing the chip cycle at lower multiples—including a dominant wafer-inspection equipment monopoly, a specialized semiconductor foundry, and an enterprise cloud security infrastructure leader.
See the chip-cycle leaders Tech Titans holds at lower multiples: Explore the Tech Titans strategy on InvestingPro
AMD makes its money by selling hyperscalers the full data center stack—EPYC server CPUs, Instinct MI450 accelerators, and Helios rack-scale systems that bundle them together. Cloud buyers that refuse to depend on a single vendor have turned that stack into a second-source franchise, with Anthropic, Meta, Microsoft, OpenAI, and Oracle all named as Helios and MI450 customers.
Third-quarter results proved that franchise is now driving the whole company. Revenue surged 45% year-over-year to a record $13.4 billion, topping the $13.06 billion consensus, while non-GAAP EPS of $2.09 beat the $1.94 estimate and climbed 74%. Data center revenue nearly doubled to $8.5 billion—64% of total sales, up from 47% a year earlier—and the segment's operating margin expanded from 25% to 34%. Management guided fourth-quarter revenue to about $17 billion, roughly 66% growth, and raised its 2027 outlook to more than 80% revenue growth, with data center expected to exceed 80% of sales.
Cash conversion has not kept pace with that growth. Inventory surged about $3 billion sequentially to $11.5 billion to meet data center demand, holding free cash flow to $554 million despite $1.2 billion in operating cash flow.
Wall Street remains firmly in AMD's corner. Analysts issued 29 upward EPS revisions against just four downward over the past 90 days, and the median price target stands at $657.49. Baird sits at the top with a Buy and a $1,250 target, while HSBC and RBC Capital hold at $540 and Morgan Stanley at $550.
InvestingPro's Fair Value models take the opposite view, placing intrinsic value at $420.48 per share—23.9% below the $552.90 price and about $237 under the median Street target. The bull case rests on the earnings ramp: consensus expects EPS to climb from $7.77 in fiscal 2026 to $17.08 in fiscal 2027, which pulls the forward multiple down from 66.3 times to 30.2 times and leaves a PEG ratio of 0.90.
The main risk is that the price already assumes that ramp is delivered in full. AMD trades at 80.8 times EV/EBITDA and 13.3 times book value, while its non-GAAP gross margin of 56% trails NVIDIA's roughly 70% and is guided to slip to about 55% in the fourth quarter. Gaming revenue tumbled 40% to $773 million, AMD expects the PC market to decline by a double-digit percentage in 2027, and a $1.1 billion non-cash warrant charge cut GAAP EPS to $1.46. Supply also remains a binding limit, with demand exceeding supply across both GPUs and CPUs.
Before chasing a 13% weekly surge, investors must weigh AMD's data center acceleration against a valuation that already sits well above Fair Value. Instinct GPU gross margins, hyperscaler order concentration, and the forward earnings path behind a triple-digit trailing multiple are detailed inside the Advanced Micro Devices Pro Research Report.
Evaluate Instinct GPU margins, hyperscaler order concentration, and forward earnings: Access the Advanced Micro Devices Pro Research Report on InvestingPro
AMD has proved it can win hyperscaler orders and turn data center demand into record results. NVIDIA's turmoil may push more of that demand AMD's way, but momentum traders are already paying for it up front.
Relying on a single momentum-driven chip stock while a sector leader stumbles leaves capital exposed to a valuation reset when the rally cools. Rather than attempting to chase overextended weekly rallies manually, InvestingPro's data-driven strategies evaluate thousands of balance sheets every month to isolate companies capturing semiconductor demand without paying triple-digit earnings multiples.
For investors seeking high-conviction ideas in the active November lineup, full access to all ProPicks AI strategies costs just $9 a month.
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Disclosure: The author holds no position in the stocks mentioned. Data and financial metrics as of November 12, 2026.
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