Advanced Micro Devices' (NASDAQ: AMD) latest results were met with mixed reactions. Though the chipmaker delivered terrific annual growth in its revenue and earnings, its guidance for the current quarter fell short of Wall Street's elevated expectations.
AMD expects first-quarter revenue of $1.8 billion, a jump of 42% from the prior-year period. But analysts were looking for $1.86 billion in revenue. This seems to have spooked investors slightly, as AMD shares fell after the results came out.
Now, that isn't entirely surprising given that AMD is trading at a rich trailing price-to-earnings (P/E) ratio of 184. The five-year earnings multiple for AMD stock is 137 times. So the company needs to meet the bar that the market sets, and any failure on that part could trigger panic among investors who might be eager to book profits considering the sky-high valuation.
Source Fool.com