In This Article:
Advanced Micro Devices (NASDAQ:AMD) is making moves. Recently, the chipmaker announced a fresh $6 billion stock buyback, pushing its total repurchase firepower to $10 billion. The goal? Shrink share count, boost EPS, and restore investor confidence. AMD's latest $10 billion AI collaboration with Humain is a bold swing, but questions linger on how quickly that bet can pay off.
CEO Lisa Su says the repurchase signals strong belief in AMD's strategic direction and long-term cash flow. But Q1 free cash flow was down over 33%to $727 millionand cash on hand now trails current liabilities. That doesn't leave a huge margin for error. Add to that fierce competition from Nvidia's (NASDAQ:NVDA) AI dominance and a wave of custom chipmakers, and AMD's runway feels tight. Still, reducing the share count could help shore up EPSespecially if future earnings stabilize or rebound.
The bigger picture? The long-term chart shows AMD's EPS without non-recurring items steadily trending up. Despite stock price swings, earnings performance has been resilient.
If buybacks kick in and AI execution improves, the stock could catch up to the fundamentals. But make no mistakethis is now a show-me story.
This article first appeared on GuruFocus.