Advanced Micro Devices Inc (AMD, Financial) shares experienced a significant decline, dropping 8.41% to $88.70. This decline is part of a larger market trend, with both the S&P 500 and Nasdaq Composite experiencing notable drops due to increased import taxes on China.
The announcement of a hike in import taxes on China, from an initial 104% to a final effective rate of 145%, triggered widespread market concerns. This decision, coupled with a 125% tariff on top of a pre-existing 20% import tax, further pressured AMD's stock, leading it to reverse some earlier gains seen during a 90-day pause on tariffs for countries other than China.
The market's reaction is fueled by concerns over potential geopolitical tensions between the U.S. and China, especially among investors wary of a potential Chinese invasion of Taiwan. Such a development would significantly impact AMD, given its reliance on Taiwan Semiconductor Manufacturing for its chip production.
Looking ahead, AMD is set to host its Advancing AI 2025 conference on June 12. During this event, the company is expected to unveil its AI strategy and next-generation products, amid its ongoing efforts to compete with Nvidia in the AI processor market.
From a valuation standpoint, AMD's current GF Value is considered significantly undervalued at $133.23, providing a positive outlook for potential investors. According to the [GF Value](https://www.gurufocus.com/term/gf-value/AMD), AMD's stock appears attractively priced below its estimated intrinsic value. The company's financial fundamentals reflect strong financial strength with an Altman Z-Score of 7.52 and a Piotroski F-Score of 8, suggesting a healthy financial position.
Despite current market challenges, AMD exhibits several positive signs, such as its close proximity to a two-year low in Price, PE, PB, and PS ratios, indicating potential upside for long-term investors. Financially, AMD shows a robust balance sheet highlighted by its 2.32 cash-to-debt ratio and 65.62% institutional ownership, adding another layer of confidence in its long-term viability.
