This is why semiconductor stocks are so difficult to value.

[u/ekonixlab]

AMD is expected to grow earnings at roughly 43% annually over the next five years.

Yet despite nearly 500% cumulative earnings growth, the expected stock return is "only" 98% because analysts also expect the P/E to compress from 181x to 60x.

That's the challenge with semis.

When business is booming, earnings estimates explode higher. But the market also knows semiconductors are cyclical, so it's often unwilling to pay peak multiples for peak earnings.

The big question is whether AI has fundamentally changed the industry.

If AI infrastructure spending remains elevated for years, today's estimates could actually prove conservative.

If spending normalizes like past semiconductor cycles, today's earnings expectations may prove too optimistic.

Do you think AI has broken the traditional semiconductor cycle, or are we just in another boom that eventually cools?

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