Why Are Advanced Micro Devices Shares Falling Monday?

Shares of chip stocks, including Advanced Micro Devices Inc. AMD, are trading lower Monday. The sector may be selling off following strength in the first half of 2024, driven by AI momentum.

What To Know: Despite a high Price to Earnings (P/E) ratio of 235.09, indicating a high valuation, AMD’s Price to Book (P/B) ratio of 4.67 and Price to Sales (P/S) ratio of 11.61 suggest potential undervaluation in these aspects.

However, its Return on Equity (ROE) of 0.22%, well below the industry average of 4.79%, and lower-than-average EBITDA and gross profit indicate inefficiency and potential financial challenges. AMD's revenue growth of 2.24% also lags behind the industry average of 14.15%, highlighting a challenging sales environment.

What Else: Meanwhile, Nvidia Corp. NVDA, a major competitor, faces regulatory scrutiny from French antitrust regulators over alleged anti-competitive practices, potentially impacting investor sentiment in the broader semiconductor sector.

Despite these challenges, AMD maintains a lower debt-to-equity ratio of 0.05 compared to its top peers.

AMD Price Action: AMD shares were down 3.78% at $156.18 at the time of writing, according to Benzinga Pro.