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However, AMD’s trailing-12-month gross profit margin and CAPEX/Sales are 45.71% and 2.08%, respectively, compared unfavorably with the 49.04% and 2.28% industry averages. Moreover, the stock is currently trading at an expensive valuation. In terms of forward Price-to-Book ratio, AMD’s 15.39x is 156.3% higher than the 6x industry average. In addition, the stock’s 8.33x forward P/S is 103.2% higher than the 4.10x industry average. So, it’s wise to wait for a better entry point in the stock.
Nevertheless, the industry looks attractive right currently. Because the governments of several countries are investing heavily to address the semiconductor chip shortage, prominent players in this space should benefit from the rising demand for semiconductors from several industries. According to a SpendEdge report, the global semiconductor market will grow at a 6.8% CAGR from 2021 – 2025.
