What happened

Shares of Advanced Micro Devices (NASDAQ:AMD) gained 32.2% in January of 2019, according to data from S&P Global Market Intelligence. The price increase hinged on AMD's solid fourth-quarter report at the very end of last month.

So what

In the fourth quarter of 2018, AMD saw sales rise 6% year over year to $1.42 billion. On the bottom line, adjusted earnings increased from $0.01 to $0.08 per share. The revenue result landed just below analyst expectations, while earnings met Wall Street's expectations. The microchip designer also guided first-quarter revenue 24% below the year-ago period's reading.

If all of this sounds more like reasons for a plunging stock than a big gain, you're absolutely right. However, AMD also guided full-year revenue to "high single-digit percentage" growth thanks to an upcoming slate of data center and high-end PC processors. That longer-range optimism was enough to light a fire under AMD's stock.

Gold-colored microprocessor on a white background

There's gold in those chips. Image source: Getty Images.

Now what

AMD's investors have enjoyed a mind-boggling 1,000% return over the last three years. The stock is trading at nosebleed-inducing valuation multiples such as 39 times forward earnings estimates and 129 times trailing free cash flow. That's impressive for a company projecting no more than single-digit revenue growth for the next year alongside unpredictable bottom-line margins.

I'll just keep watching AMD from the sidelines, thank you very much.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.