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Holding AMD Into 2027 Just Became a Harder Call

Its forward P/E crossed 85 while Nvidia sits at 26 and Broadcom at 32

By Damilola Esebame, CFEI® , Edited by Laura Hohenstein

Updated Oct. 14, 2026

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Advanced Micro Devices (NASDAQ: AMD) pushed its forward price-to-earnings (P/E) ratio past 85 after a gain of more than 180% in 2026, roughly triple the 26 at Nvidia (NASDAQ: NVDA) and nearly three times the 32 at Broadcom (NASDAQ: AVGO).

The rally pushed AMD's market capitalization past $970 billion with trailing earnings of $6.43 billion, and doing better financially as an investor in artificial intelligence (AI) chipmakers means weighing how much further the multiple could stretch before mean reversion sets in.

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AMD's trailing revenue reached $41.31 billion with a 55.72% gross margin

AMD generated $41.31 billion in trailing twelve-month revenue with a gross margin of 55.72% and operating income of $6.54 billion, translating to a net profit margin of 15.58% on net income of $6.43 billion, StockAnalysis documented.

Free cash flow reached $8.40 billion, yet the stock trades at 115.44 times that figure, and the earnings yield of 0.66% highlights how much growth you need from AMD to justify your entry price at these levels.

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Data center revenue surged 107% to $6.72 billion last quarter

AMD posted quarterly revenue of $11.54 billion, a 50.11% increase from the prior year, with earnings per share (EPS) of $1.66 on the strength of its data center segment. The data center division generated $6.72 billion in revenue, a 107% jump, and its segment operating income swung from a $155 million loss to a $2.10 billion profit, while gaming revenue declined 31%, 24/7 Wall St outlined.

Chief Executive Officer Lisa Su called the results "an excellent quarter" as AMD guided third-quarter revenue to roughly $13 billion, a 41% increase from the year-ago period. The Meta Platforms and OpenAI deals that fueled the data center surge were announced in 2025 and are already deployed, meaning the stock has effectively priced in the same revenue stream twice, The Motley Fool documented.

Broadcom's AI chip revenue grew 143% to $10.8 billion with $30 billion in bookings

Broadcom posted second-quarter revenue of $22.19 billion, a 47.9% increase, with AI semiconductor revenue of $10.8 billion representing a 143% surge and its eighth consecutive adjusted EPS beat at $2.44, 24/7 Wall St noted.

AI bookings exceeded $30 billion against the $10.8 billion shipped, and management guided third-quarter AI revenue to $16 billion with full-year AI semiconductor revenue of $56 billion and visibility extending into 2028.

AMD's forward P/E exceeds both Nvidia and Broadcom by at least 53 points

AMD's forward P/E of more than 85 dwarfs both of its primary AI chip competitors, and the gap demands significantly faster sustained growth from AMD to justify its premium over the field.

AMD's trailing P/E stands at 151.67 with a price-to-sales ratio of 23.49, reflecting the premium the market assigns to its AI chip exposure.
Nvidia trades at 26 times forward earnings and Broadcom at 32 times, well below AMD's multiple despite both companies delivering strong AI revenue growth in their latest quarters.
AMD's earnings yield is 0.66%, and its price-to-free-cash-flow multiple is 115.44.

Analysts set a consensus price target of $636.21 from 55 ratings

The consensus analyst price target for AMD stands at $636.21, representing 7.06% upside from the October 12 close of $594.24, with 55 analysts maintaining a Strong Buy rating, StockAnalysis documented.

The business may take a long time to grow into its valuation at these multiples, and stocks are entering a new year at extreme forward P/E ratios. P/E ratios have historically reverted toward more reasonable levels, meaning your holding period assumption is the key variable for 2027, The Motley Fool noted.

AMD's valuation gap over Nvidia and Broadcom widened despite overlapping customers

Broadcom supplies custom accelerators to Google, Meta Platforms, OpenAI, and Anthropic, overlapping directly with AMD's own hyperscaler customer base, and the AI semiconductor revenue from those contracts grew 143% last quarter, 24/7 Wall St outlined.

The Motley Fool showed that profit-taking and rotation toward Nvidia and Broadcom could create headwinds for AMD heading into 2027, and carrying the highest forward P/E among the three raises your downside risk whenever the broader market pulls back.

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Anthropic plans to deploy up to two gigawatts of MI450 chips in Helios racks

24/7 Wall St reported that Anthropic's collaboration with AMD calls for up to two gigawatts of MI450 accelerators deployed in Helios racks, and Microsoft is scaling the Helios platform on Azure, giving AMD two of the highest-profile AI infrastructure contracts outside Nvidia's ecosystem.

Meta and OpenAI deployments are already underway, and capital spending on AI infrastructure has kept the major indexes at record highs, yet those contracts were signed in 2025, leaving you to weigh how much incremental revenue remains unpriced in the stock, The Motley Fool documented.

Bottom line

AMD reports third-quarter results on November 3 with a return on equity of 10.20% against a weighted average cost of capital of 17.68%, and your decision to start investing at these multiples depends on whether data center revenue acceleration could outpace the compression that a 0.66% earnings yield signals.

AMD's forward P/E gap over Nvidia and Broadcom remains the widest in this cycle. AMD's 50-day moving average of $531.28 and 200-day moving average of $387.22 show how far the stock has traveled from its technical base, reinforcing that your time horizon is the most important input for the 2027 decision.

This article is for informational purposes only and should not be considered investment advice.

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