AMD (AMD +3.42%) has been an incredible stock to own over the past year. Its stock has risen more than 300%, making it one of the best-performing stocks in the market. After a run like that, it's sensible for investors to ask what's next.
So, does AMD have more room to run? Or has it gotten a bit too hot? Let's take a look.
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AMD has done well, but not that well
Most people view AMD as an alternative to Nvidia (NVDA +1.30%). While that's partly true, AMD has more exposure to consumers through its Client & Gaming business. This subjects AMD to more cyclical consumer spending, although the data center side of its business could also get hit with a cyclical wave once artificial intelligence (AI) spending wraps up. However, that may not be for some time.
NASDAQ: AMD
Key Data Points
At the end of 2025, AMD announced its five-year growth trajectories, and they were impressive. AMD believes that its Data Center division will grow at a 60% compounded annual growth rate (CAGR) for the next three to five years. Its other two divisions, Client & Gaming and Embedded, are projected to grow at a 10% CAGR over the same time frame. That leads to a strong 35% CAGR projection, which the market has gotten extremely excited about.
During Q1, AMD's results were right in line with its long-term projections, with Data Center growing at a 57% pace, Client & Gaming at 23%, and Embedded at 6%. The stock rose rapidly thanks to excitement following earnings, and now trades for a price 63 times forward earnings.
AMD PE Ratio (Forward) data by YCharts
Those are solid results, but is it enough to warrant a valuation like that? I don't think so. As I said before, AMD is often seen as an Nvidia alternative, so let's compare it.
According to Nvidia's latest results, it grew revenue at an 85% year-over-year pace and trades for about 24 times forward earnings. There's not a whole lot to debate about which company is growing faster and which stock is the better value, because Nvidia easily takes the cake in both areas.
With AMD's stock rising so far, so fast, and having a premium valuation, I'm not sure how much room there is left to run in AMD's stock. I have missed out on the massive AMD rally, but if I were an AMD shareholder, I'd consider taking some of those gains and rolling them into Nvidia's stock, as Nvidiua seems to have a lot more upside than AMD right now, based solely on valuation.
