AMD is undervalued despite high valuation; expected to rise to $500-$600 by late 2026/early 2027 driven by AI efficiency gains increasing total demand.

AMD is 22% below.

AMD is a whopping 117.

So compare that to AMD at 117. Totally different businesses, but you know 26 seems a lot better. AMD at 117, we'll talk about why it's that high later on when I cover AMD.

So, the next stock is AMD's with a PE ratio of 117. Now, guys, 117 is crazy and people are saying AMD is overpriced. I strongly disagree. I think in 2026 AMD can be $500 to $600 per share.

I think it's actually really cheap. I think it's undervalued. Uh in my opinion, currently it's undervalued by 15 to 20% in the shorter term. So I wouldn't be surprised to see AMD at around $550 per share in October, November, or December of 2026.

Hey, maybe even happens later on in um this month of September.

But yeah, the market cap is $745 billion. And this is actually the most expensive multiple on the list by a factor of four. So it might be a little bit weird like why is Uncle Henry talking about you know a stock that has a really high PE ratio.

Well let me explain why because this one needs explaining. 52 week range is from 150 to 5.85.

And this is actually the stock that I picked that did the best in my leaps challenge. So back in January I ran a leaps challenge and we ended in July. We ended early because I personally ended up doubling the account.

So I am going to launch a new leaps challenge pretty soon here. It's really really been asked very popular. So I will launch that again soon. But this was the top play that I had.

And honestly I am still bullish on AMD. I think this stock is you know obviously gone up a lot from its 52- week low. But I think that we can hit another 52- week high. I think that's going to happen in early 2027.

So, why the bear story on AMD doesn't really make sense and I think there's too many bears and they're going to be losing money or just missing out on on the runup when the stock goes from like 455 to like 555 which I think is not going to take that long.

So, AI models are getting cheaper and cheaper and they keep getting more efficient. So, obviously these two companies are at the forefront so Nvidia and AMD and are heavily linked to AI spending.

So that is absolutely undeniably true. Now they supply chips that power AI

and the bare idea is that if AI models keep getting cheaper to run and more efficient and you know especially with new Chinese AI models coming out you know China is doing extremely well with AI.

They're not at the forefront I want to say but they are heavily used because they're just a lot cheaper. And the bears basically think that because of China there's going to be less chip demand because AI models are more efficient.

No, right? But I personally think that could be furthest from the truth.

And the craziest part was that this was figured out in 1865. And let me explain what that means. In 1865, William Stanley Joins, an English economist and logician, figured out something odd about coal.

The history, the story is repeating itself. Okay. Like AI, steam engines were getting much more efficient, meaning much less coal was needed to power them. And everyone expected coal consumption to go down.

But the opposite actually happened. Steam engines were way more efficient and way more cost effective. And that actually equaled to starting to make sense in a place it never had before.

And then coal started being used in many places that it was not used before. And the demand just exploded for coal, right? It was not a singular use case. So guess what? The same thing is happening with AI.

Companies that couldn't justify AI costs suddenly will be able to due to AI costs going down. And this is equal to overall AI consumption going up. So despite the prices coming down, this is way more efficient for the market.

But I actually think demand is only going to increase very similar to what happened to coal back in the, you know, mid to late 1800s. So more AMD chips are going to be bought in my opinion.

Most average investors don't even realize this. And I just want you to look at AMD's financials because they keep getting better and better. So, data center segment revenue was $6.7 billion, up 107% year-over-year, driven by strong demand for APYC processors and AMD Instinct GPUs.

You can see here the GAP quarterly financial results Q2 and you can see Q2 2025. So, this is a year-over-year comparison. Revenue up 50%. gross profit, which arguably is even more important, up 103%.

And you can see here everything is up. There's nothing that's down. Operating expensive is of course going to be up, but operating income is up a ton. You can see 1,500.

So, this is exactly why the PE ratio doesn't matter. Please repeat with me. The PE ratio for AMD doesn't matter just like it didn't matter for Amazon when they were growing for Tesla when it was in the thousands.

In the most recent case, Palanteer, which was like 4600 PE ratio, that didn't stop Palanteer either, right?

And I basically see something pretty similar for AMD. I think the P ratio is not going to matter. The P ratio of 117 trading for $455 that is looks expensive, but it's actually cheap.

I really think it's cheap because of how fast they are growing.

So AMD in Q2 2026 reached a record 11.5 billion in revenue with profit at about 6.23 billion. You know how insane that is? That is such a high profit margin. And to me that's why I'm okay with 117 PE ratio.

Now the second source and the you know next argument is put yourself in the seat of the buyer. So who's the buyer? Well the buyer is Microsoft. It's Meta. It's all the you know hyperscalers.

If you're Meta or you're Microsoft or you're a sovereign fund building a national data center, you are about to spend tens of billions on chips, right? Do you really want one supplier setting the price?

Probably not. You don't want to be working with a monopoly. You might want to own a monopoly, but when you are someone that's buying from a monopoly, it's not good, right? And a monopoly is also not good for fair competition, which means that prices will be inflated.

So nobody in the history of procurement has ever wanted that ever. So single suppliers means a single price. Single supplier means single lead time. Single supplier means one export rule away from a shutdown.

Every large buyer has a structural reason to make work. So AMD doesn't need to be Nvidia. AMD needs to be credible enough that buyers can point at it in a negotiation. And this is also

And this is also really important because I actually kind of see this as like a duopoly. Doesn't have to be a single monopoly, but when there's very few companies in the market, it kind of creates a duopoly where they can sort of work together and still set very high prices.

And that's pretty much what I see with AMD and Nvidia.

So now here's the flip side. This is the riskiest name on this list and here's the math on why. Of course, the P ratio 117. The price is already assuming a lot has to go, right?

Which I think it is, but pay attention to the risk.

Data center spending slows in the whole order book gets pushed out. The software gap holds and buyers stay put. Any of that happens and the 117 PE ratio is going to be won by the bears.

So then there's also some geopolitics like these chips are made in Taiwan. export rules can change with a single announcement. And yes, that is a risk, but I do think that AMD, like Nvidia, is going to continue to prosper.

And that's why I'm actually the most bullish on AMD of probably the list of five stocks in this video, although I like all five.

Uh Netflix is higher, AMD is higher and then Iran is obviously we don't have a PE ratio, but when they do become profitable, I rent is going to have a high PE ratio.