What happened
Shares of Advanced Micro Devices (AMD +18.37%) fell 25.3% in September 2022, according to data from S&P Global Market Intelligence. The semiconductor designer released some new embedded and mobile chips last month, but the new products were not the reason for AMD's diving stock price. Instead, the richly valued shares were weighed down by troublesome ripples in the American economy.
NASDAQ: AMD
Key Data Points
So what
The only significant September news from the company itself was the aforementioned release of updated Ryzen 7020 processors for budget-conscious laptops and the Ryzen Embedded V3000 series, bringing the Zen 3 chip architecture into the embedded market. It's a bit early to judge these chips on their own merits since they won't hit store shelves, laptops, and networking devices until later this year. However, the launches were generally met with open arms by the hardware enthusiast press. AMD's stock certainly didn't suffer from that twin launch, closing the launch date's trading session just 0.2% lower.
No, AMD's slouching chart had nothing to do with the company's current news. The drop marched in lockstep with the stock market overall, amplified by the AMD stock's volatile nature. The S&P 500 market index ended September 9.3% lower, hamstrung by continued inflation concerns. That basic issue was worsened by a direct order from U.S. government officials to AMD and Nvidia (NVDA +5.93%), blocking the two companies from exporting artificial intelligence (AI) chips to China.
Now what
AMD shares have fallen 52.8% year to date, but don't cry for Advanced Micro Devices' investors. The stock is still up by 134% over the last three years and 409% in five, leaving the broader market far behind from a multiyear perspective.
The loss of Chinese export opportunities isn't good news, of course, but AMD's business is still constrained by the semiconductor industry's manufacturing shortage. So the company shouldn't have trouble finding buyers for AI chips that had been earmarked for China, at least in the short term. And as the industry gets back to full chip-building capacity over the next couple of years, AMD's client list will also have time to evolve.
In that light, AMD investors should appreciate this opportunity to buy the stock at a reasonable price. Whether you measure AMD's valuation in price-to-earnings, price-to-sales, or price-to-free-cash-flow ratios, the stock hasn't been this affordable in years.
AMD Normalized PE Ratio data by YCharts.
