AMD's stock price jumped 9.1% on Thursday Eastern Time, and its market value exceeded the US$300 billion mark for the first time, reaching US$311 billion. As AMD's stock price continues to soar, the company's market value ranking among the S&P 500 constituent stocks has jumped from 222nd five years ago to 22nd today. However, as AMD's stock price is rising like a rocket, AMD CEO Su Zifeng has recently made an unusual move to cash out.
AMD crosses $300 billion market capitalization threshold for first time
Amid the artificial intelligence craze, AMD's stock price surged by more than 127% last year and rose another 30.6% this year. AMD stock has more than doubled since its lows in October last year.
AMD stock price trend over the past five years
In fact, AMD's stock price has been soaring for most of the past five years, and its market value has risen much faster than imagined. Five years ago, AMD ranked 222nd in market value among the S&P 500 constituent stocks. Four years ago, its market value ranking had improved to 114th. A year ago, AMD's market capitalization ranking further jumped to 58th. Today, the company's market value ranking among the S&P 500 constituent stocks has reached 22nd.
AMD is regarded as the biggest beneficiary stock after Nvidia in the artificial intelligence boom. Earlier on Thursday, Citigroup issued a report saying that it remains "very bullish on semiconductors," especially as the artificial intelligence market continues to grow, with various companies and organizations rushing to buy artificial intelligence chips. The company lists AMD as one of its bullish stocks along with Nvidia and Broadcom.
In view of the severe shortage of NVIDIA AI chips, the market is increasingly turning its attention to alternatives to NVIDIA chips, such as AMD chips. After the U.S. stock market closed on Thursday, a similar signal came from Dell's earnings conference: Dell CEO Jeff Clark said on the company's earnings call that the shortage of high-end chips has hindered the development of the industry, and demand continues to exceed supply:
“We are also seeing strong interest and orders for AI-optimized servers equipped with next-generation AI GPUs, including the (NVIDIA) H200 and (AMD) MI300X.”
AMD doesn't look cheap after its recent gains, though. The stock's earnings ratio is now close to 50 times, much higher than industry leader Nvidia, which has a relatively modest P/E ratio of 32 times.
While analysts are generally optimistic about AMD, with more than three-quarters of companies tracked by Bloomberg recommending buying AMD stock, the stock is now essentially in line with the average analyst price target, suggesting further gains from here may be limited.
Su Zifeng made a rare move to reduce holdings?
As AMD's stock price is soaring, the trend of AMD's internal executives reducing their holdings is particularly eye-catching.
SEC documents show that AMD CEO Su Zifeng sold 125,000 non-option shares on February 21 at prices ranging from $162.06 to $164.84 per share, worth more than $20 million.
The move was somewhat unusual: Although Su had sold stock before, in recent years the sales had been options expiring within two years. The last time she sold non-option stocks was back in 2019.
VerityData's Ben Silverman noted that the move may reflect a deeper valuation perspective from AMD's internal personnel. Insider sales of stock, especially when converting from options to outright shares, can often reflect the insider's view of the company's current valuation.
The market's reaction to AMD's share sale has been mixed. Some investors believe it is a strategic financial decision, while others are worried that it may imply that company insiders are not optimistic about AMD's valuation prospects.
Although Su Zifeng's reduction of holdings has caused some concerns, an AMD spokesperson emphasized that Su Zifeng still holds about 4 million AMD shares and that the recent sale "is still part of Su Zifeng's 10b5 plan, and she still holds a large number of shares after the transaction."
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