AMD's market cap exceeds $300 billion amid an AI-fueled rally

(Bloomberg) — Advanced Micro Devices Inc. shares jumped. on Thursday, as the chipmaker continued to surge, hitting its latest in a series of new records this year.

The stock rose as much as 7.9%, a rise that put the company's market cap on track to close above $300 billion for the first time. Shares have more than doubled from their October low.

The company is seen as a major beneficiary of artificial intelligence, and last month, optimism about new AI processors helped AMD shares recover from weak expectations.

Earlier Thursday, Citigroup wrote that it remains “very optimistic about the semifinal,” especially as the “AI market continues to grow” with all kinds of companies and organizations buying AI chips. The company singled out AMD as one of its favorite stocks, along with Nvidia Corp. and Broadcom Inc.

However, the stock doesn't exactly look like a bargain after recent gains. Shares trade at roughly 50 times estimated earnings, making them much more expensive than industry leader Nvidia, which has a comparatively lower multiple of 32 times.

While analysts are broadly positive — more than three-quarters of companies tracked by Bloomberg recommend buying AMD — shares are just 2% below their average price target, suggesting additional upside from here may be limited.

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