S&P 500 may face selling pressure as systematic funds reach full exposure
Investing.com -- Lynx Equity Strategies issued a cautious note on AMD (NASDAQ:AMD) ahead of its earnings release, warning that the stock’s sharp rally may be outpacing the company’s fundamentals.
“AMD’s ~80% rise over 3 months has several assumptions built into it,” wrote KC Rajkumar of Lynx Equity Strategies.
Chief among them is said to be the belief that AMD’s MI350/MI355 and upcoming MI400X GPUs have secured broad adoption from hyperscalers like Meta (NASDAQ:META) and potentially AWS.
But according to Rajkumar, “we doubt if AMD has bagged share at AWS… Without AWS, AMD may be dependent on one key backer – META.”
While some analysts are forecasting over 30% revenue growth in calendar 2025, Lynx warned that “investors are yet to see tangible signs of MI350/MI355 adoption at hyperscale data centers this year.”
The firm stated that expectations AMD will grow earnings per share to $7.50–$8.00 by 2027 and justify $200 price targets are based on “hype built into Street expectations.”
Lynx also questioned the significance of AMD resuming shipments of its MI308 chip to China, noting that China’s internet regulator may apply the same import restrictions to AMD as it has to Nvidia (NASDAQ:NVDA).
The firm’s valuation analysis implies downside risk. “Based on 25x multiple over Cy26 consensus EPS of ~$6, we think the stock is likely to test the $150 price level,” the note said.
Rajkumar concluded: “We think the stock has discounted multiple years of strong revenue growth and may have run ahead of itself.”