Should you buy AMD shares after BMO upgrade?

On Monday, Advanced Micro Devices Inc. (NASDAQ:AMD) shares fell 1.66% despite a positive rating from BMO analyst Ambrish Srivastava. The analyst upgraded AMD shares from an underperform (sell) rating to a market perform (neutral) rating, citing the continued execution and expansion of AMD performance estimates.

Srivastava said the AMD shares now look more reasonably valued than earlier this year when the investment research firm issued a sell rating. In addition, the analyst raised AMD’s price target from $80 per share to $110 per share. The stock traded at about $108.19 per share at the time of writing.

AMD shares recently pulled back after the post-earnings spike late last month.

So, is AMD stock a buy in Q3 2021?

Although Advanced Micro Devices shares spiked at the end of July, the stock still trades at a fair valuation of 39.30 in price-earnings ratio. In addition, AMD’s forward P/E ratio of 36.05 is lower than its trailing P/E, making the stock attractive to value investors. 

In addition, analysts expect Advanced Micro Devices earnings per share to grow by a whopping 604% this year and at an average annual growth rate of 32.44% over the next five years, making the stock compelling to growth investors.

Therefore, now could be the perfect time to buy AMD shares before they bounce back from the recent pullback.

Technical overview: Advanced Micro Devices stock price predictions for August 2021

Technically, AMD shares appear to have a pullback from overbought conditions in the 14-day RSI, creating room for an upward movement. In addition, despite the recent surge in Advanced Micro Devices stock price, shares are only up 17.19% this year, meaning there is room for growth.

Therefore, investors can target rebound profits at approximately $115.97 or higher at $122.56. The key support levels are $101.70 and $95.11.

Bottom line: the case for buying AMD shares now

In summary, Advanced Micro Devices shares appear to be fairly valued based on the trailing P/E ratio. However, with analysts expecting earnings to grow significantly this year and over the next five years, the recent pullback could be a perfect opportunity to buy the AMD stock.