AMD, Meta (META), 10% Surge in One Day...Is it Right to Chase Now?

▲ AMD, Meta (META)/AI Generated Image

Riding the artificial intelligence (AI) craze, AMD and Meta both surged by around 10%. While the market is cheering, a warning has been issued that caution is needed when chasing these stocks at this point.

Zacks, a U.S. investment media outlet, analyzed in a report on September 21 (local time) that AMD and Meta (Meta Platforms, META) led the large-cap rally. Analyst Sean Pruitt acknowledged that both stocks are strong beneficiaries of the AI boom. However, he advised waiting for an attractive entry point rather than chasing them immediately after a short-term surge. Currently, both stocks are rated 'Grade 3 (Hold)' in Zacks' investment ratings.

AMD's market capitalization surpassed the $1 trillion mark for the first time during intraday trading. Its stock price exceeded the $600 level, setting a new all-time high. The stock has surged by 180% this year alone. The success of Meta's AI agent, Muse, acted as a catalyst for the stock's explosion. As the perception that high-performance central processing units (CPUs) are essential for autonomous AI agent operation spread, expectations for the expansion of the AMD EPYC server processor market grew. However, given the sharp rise in stock price compared to the beginning of the year, it is diagnosed that a significant portion of the market's optimism has already been reflected in the price.

Meta also showed strength, forming its own unique momentum. The personal AI agent Muse, unveiled earlier this month, topped the U.S. Apple App Store's free app chart, raising investors' expectations. Muse is equipped with functions that autonomously handle user tasks such as sending emails, booking travel, filling out forms, and online shopping. Concerns about monetization due to astronomical AI infrastructure investment costs had been raised, but Muse's initial success dispelled these worries.

There is a clear difference between the two companies in terms of growth potential and stock price burden. AMD continues to show rapid revenue growth but faces price pressure due to its short-term surge. Meta, on the other hand, despite immense capital expenditures and increasing cost pressures, trades at a forward price-to-earnings (PER) ratio of around 23x, receiving a relatively stable valuation. Analyst Pruitt recommended refraining from aggressive chase buying in a situation where the stock has surged by nearly 10% in a single day, although long-term growth potential remains valid.

[Article Key Summary]

-AMD and Meta (META) both surged by around 10% driven by increased AI demand.

-AMD surpassed a market cap of $1 trillion, and Meta eased monetization concerns with the success of its AI agent Muse.

-Zacks maintained a positive long-term outlook for both stocks but urged investors to refrain from chasing them after the short-term surge.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*