Is AMD Stock a Hidden Bargain After Recent Pullback?

Advanced Micro Devices (AMD) shares have faced significant pressure in recent weeks, retreating noticeably from their previous highs. However, while retail investors focus on the negative price action, the market appears to be overlooking substantial evidence pointing toward undervaluation. Fresh valuation assessments and aggressive institutional buying suggest the semiconductor giant might be trading at a discount, potentially turning the recent sell-off into a strategic entry point.

Major Investors Are Accumulating Shares

The argument for undervaluation gains substantial credibility from the trading patterns of major financial institutions. Contrary to the nervous sentiment among smaller investors, top asset managers have been actively building positions during the price weakness. Recent portfolio disclosures and mandatory 13F filings reveal significant accumulation:

• Wellington Management Group boosted its stake by a remarkable 335.9%, acquiring 3.73 million additional shares.
• Jennison Associates added 3.87 million AMD shares to its portfolio.
• Winslow Capital Management increased its holdings by approximately 3.44 million shares.

This activity demonstrates a clear divergence: as the share price declines, ownership by sophisticated investors rises. The so-called “smart money” is using the period of retail investor uncertainty to consolidate its position.

DCF Analysis Points to Substantial Upside

A discounted cash flow (DCF) analysis released over the weekend presents an extremely optimistic valuation scenario. According to data from Simply Wall St, the calculated fair value for AMD shares reaches $393.29. This figure implies a theoretical undervaluation of nearly 50% when measured against the current trading level.

The market seems to be disproportionately focused on near-term risks while ignoring the long-term cash-generation potential. The valuation model forecasts that AMD’s free cash flow could surge to around $30.92 billion by 2029—a fivefold increase primarily driven by massive expansion in data center and AI accelerator segments.

Should investors sell immediately? Or is it worth buying AMD?

Operational Momentum Backed by Major Deals

This fundamental optimism is supported by concrete operational achievements in the competitive AI sector. Market analysis particularly highlights two strategic partnerships that reinforce AMD’s position as the primary challenger in this critical market:

A new agreement with Oracle for the deployment of 30,000 Instinct MI355X GPUs confirms robust demand for AMD’s latest hardware. Simultaneously, the collaboration with OpenAI to support a massive 6-gigawatt infrastructure provides long-term visibility and planning security. These developments effectively counter concerns that AMD might lose strategic relevance in the AI race.

Conclusion: Market Jitters Versus Fundamental Strength

Despite the positive indicators, the stock continues to feel the weight of high expectations following its last quarterly guidance. Shares concluded Friday’s session at just €176.88. However, the stock now finds itself in a technically oversold condition while simultaneously presenting fundamentally compelling reasons for investment.

Investors face a critical juncture. Should short-term margin concerns outweigh the substantial volume of new AI agreements and the conviction demonstrated by major institutional players? Valuation models suggest a fair value almost double the current price—a significant gap the market could close over the medium term.