Like many tech stocks so far in 2026, Advanced Micro Devices (AMD 3.46%) has hit a rough patch. The stock entered the year priced around $210, then quickly rocketed up to more than $250 by the end of January. It promptly fell following its Q4 2025 earnings announcement, and now sits nearly 23% down from its recent high and about 24% down from its all-time high established in late 2025.
With that kind of sell-off going on, investors need to determine if the price drop is warranted or if it's just a market overreaction to an earnings report. Let's take a look and see if AMD is a great stock to buy now.
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AMD is doing what management said it would
For nearly all of its life, AMD has been compared to others rather than being recognized for what it's doing by itself. Originally, it was being dominated by Intel (INTC 5.68%) in the processor world, and many think Intel essentially let it survive so that it would not be investigated for being a monopoly. Now, AMD is constantly being compared to Nvidia (NVDA 1.53%), its primary competitor in the artificial intelligence (AI) sector.
NASDAQ: AMD
Key Data Points
AMD has struggled to capture a significant market share of data center computing units, and history seems to be repeating itself. However, management believes that it has made the proper changes and innovations to start to capture some of that market share. Back in November, it gave guidance that the data center division will grow at a 60% compounded annual growth rate (CAGR) through 2030, while the overall CAGR would be closer to 35%.
So, how did Q4's results stack up in relation to that guidance?
Overall, AMD's revenue growth was 34% in Q4. This suggests it met internal expectations. However, AMD's non-data center sales contributed just as much to hitting guidance, as data center revenue only increased 39% year over year. That's obviously less than the 60% CAGR management forecast, but it's a step in the right direction. In Q3, AMD's data center growth was 22%, so if it continues this upward trend throughout 2026, then AMD is working toward hitting management's projections.
I wouldn't call AMD's comeback complete; there's still a long road ahead for its data center division. However, I think it's on the right track. The level of sell-off after the report was unwarranted, and investors could be well served to buy the dip today with expectations that results will improve throughout 2026.
